Americans Are Spending More Money. But They’re Not Actually Buying Much More.

Americans spent an additional $113.1 billion in September, but they got little more for their money as higher prices absorbed almost the entire increase, according to new government data.

Consumer spending rose 0.5% during the month, while the price of goods and services increased by the same percentage. Once inflation was taken into account, spending was virtually unchanged, the Bureau of Economic Analysis reported.

The figures point to a noticeable slowdown from August, when inflation-adjusted consumer spending increased 0.5%. They also arrive as Americans prepare for the holiday shopping season, when retailers rely heavily on households buying gifts, clothing, electronics and other merchandise.

The latest report shows that consumers are spending more dollars without purchasing significantly more goods and services. At the same time, their income is struggling to keep pace with rising prices.

Personal income increased 0.2% in September, equivalent to $54.5 billion, while disposable personal income, or the money remaining after taxes, rose by $52.7 billion.

But after adjusting for inflation, disposable income actually fell 0.3%. It was the first monthly decline since May, following no change in August.

The difference matters because higher pay or income does not necessarily translate into greater purchasing power when prices are rising faster.

Americans also saved a smaller share of their income. The personal saving rate fell to 3.8% in September from 4.0% in August, while total personal savings stood at $911.1 billion.

The saving rate measures the portion of disposable income that households do not spend. A lower rate can indicate that consumers are setting aside less of their earnings, although it does not show whether individual households are drawing down existing savings or taking on additional debt.

Much of the increase in September spending went toward services. Consumers spent $78.1 billion more on services and $35.1 billion more on goods compared with August. Services accounted for roughly 69% of the monthly increase in current-dollar spending.

The figures cover a wide range of expenses, including housing-related services, health care, transportation and recreation, rather than only purchases at stores.

Inflation has become an increasingly important part of that spending picture. The Personal Consumption Expenditures Price Index, the Federal Reserve's preferred inflation measure, increased 3.6% over the 12 months through September. That was higher than the 3.4% annual rate recorded in August.

Prices rose 0.5% during September alone, compared with a 0.3% increase the previous month. Excluding the often-volatile food and energy categories, prices increased 0.3% from August and 3.1% from a year earlier.

The distinction between overall inflation and the core measure is important because changes in energy and food prices can have an immediate effect on household budgets, even when underlying price pressures move more gradually.

The September slowdown also presents a contrast with the broader performance of the American economy.

A separate BEA report released Thursday showed that U.S. gross domestic product grew at an annualized rate of 3.4% in the third quarter, accelerating from 2.2% in the preceding three months.

Consumer spending contributed to that expansion, along with stronger business investment and government spending. Spending increased on both goods and services over the quarter, with health care, restaurant meals and accommodations among the leading contributors.

That quarterly growth, however, covers July through September and does not mean spending continued to accelerate at the end of the period.

September's figures show a different picture from the strength recorded over the full quarter, with faster price increases and a decline in inflation-adjusted income.

The timing is particularly relevant for retailers preparing for November and December. Household purchasing power and the amount of income available after meeting everyday expenses are important measures of consumers' capacity to increase discretionary spending.