Still Shopping: August 25 – 29

Consumers continued spending during the summer. Here are the five things we learned from U.S. economic data released during the week ending August 29.

Both personal spending and prices increased in July. Real Personal Consumption Expenditures (PCE) grew a seasonally adjusted 0.3 percent, the largest increase for the Bureau of Economic Analysis measure since March. Real goods spending rose 0.9 percent, with durable (+2.0 percent) and nondurable goods (+0.3 percent) each showing increases. Real services expenditures edged up 0.1 percent. Without adjustments for inflation, nominal PCE jumped 0.5 percent, funded by 0.4 percent gains for nominal personal income and disposable income. Real disposable income advanced 0.2 percent. The personal savings rate held steady at +4.4 percent. Over the past year, real PCE and real disposable personal income have increased 2.1 percent and 2.0 percent, respectively. The same report indicates the PCE Price Index grew 0.2 percent during July, off from the previous month’s 0.3 percent. Removing food and energy has the core PCE Price Index increasing 0.3 percent (matching June’s gain. Over the past year, both the headline and core price indices have risen 2.6 percent and 2.9 percent, respectively. Both were above the Federal Reserve’s two-percent inflation target.

The U.S. economy grew slightly faster in Q2 than previously believed. The Bureau of Economic Analysis estimates that Gross Domestic Product (GDP) increased at a seasonally adjusted annualized rate (SAAR) of 3.3 percent, up from the 3.1 percent advance reported last month. This upward revision was due to higher-than-previously-estimated levels of investment and consumer spending. The U.S. economy had contracted by an annualized 0.5 percent during the first three months of 2025. Contributing to Q2 growth were, in descending order, net exports, personal consumption expenditures, nonresidential fixed investment, and state/local government spending. Factors pulling down GDP included changes in private inventories, federal government spending, and fixed residential investment. The same report indicates corporate profits increased by an annualized 1.7 percent during Q2 (following a 2.3 percent decline in Q1) and rose 4.3 percent over the past year. The BEA will again review its estimate at the end of September. 

Economic growth was just below average in July. The Chicago Fed National Activity Index (CFNAI) declined by a basis point to -0.19. A CFNAI between -0.70 and zero indicates the U.S. economy expanded more slowly than its historical average. Out of 85 economic indicators, 32 contributed positively to the index, while 53 had a negative impact. Three of the four categories in the CFNAI—production (-0.10), employment (-0.06), and sales/orders/inventories (-0.02)—had negative contributions. Personal consumption and housing components also dragged down the index. The CFNAI’s three-month moving average improved by eight basis points to -0.18. 

One conference sentiment measure wobbled in August. The Conference Board’s Consumer Confidence Index shed 1.3 points to a seasonally adjusted 97.4 (1985=100). The index was at 105.6 a year earlier. The current conditions index lost 1.6 points to 131.2, while the expectations measure fell 1.2 points to 74.8. An expectations reading below 80 “typically signals a recession ahead.” 22.0 percent of consumers viewed economic conditions to be “good,” compared to 14.2 percent that saw them as bad. The press release noted that sentiment declined among younger adults, remained steady among those aged 35 to 55, and improved with older Americans.

…As did another. The University of Michigan’s Index of Consumer Sentiment dropped by 2.5 points to 58.2 (1966Q1=100). The index has fallen 14.3 percent over the past year. The current conditions index sank 6.3 points to 61.7, while the expectations measure declined by 1.8 points to 55.9. Consumers remained cautious about inflation, with one-year expected inflation at +4.8 percent and longer-term inflation at +3.5 percent. The press release noted that “few consumers spontaneously mentioned the recent events at the Bureau of Labor Statistics and the Federal Reserve.”

Other U.S. economic data released over the past week:

• Jobless Claims (Week ending August 23, 2025, First-Time Claims, seasonally adjusted): 229,000, -5,000 vs. the previous week, -3,000 vs. the same week a year earlier). 4-week moving average: 228,500 (-1.3% vs. the same week a year earlier).
• Durable Orders (July 2025, New Orders for Manufactured Durable Goods, seasonally adjusted): $302.8 billion (-2.8% vs. June 2025).
• New Home Sales (July 2025, New Single-Family Home Sales, seasonally adjusted annualized rate): 652,000 (-0.6% vs. June 2025; -8.2% vs. July 2024).
• Pending Home Sales (July 2025, Index (2001=100), seasonally adjusted): 71.7 (June 2025: 72.0; July 2024: 71.2).
• FHFA House Price Index (June 2025, Purchase-Only Index, seasonally adjusted): -0.2% vs. May 2025; +2.6% vs. June 2024.
• S&P/Case-Shiller (June 2025, National Index, seasonally adjusted): +0.3% vs. June 2025; +1.9% vs. July 2024.
• Agricultural Prices (July 2025, Prices Received by Farmers, not seasonally adjusted): -1.4% vs. June 2025; +10.5% vs. June 2024.

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