Americans kept spending money as summer waned. Here are the five things we learned from U.S. economic data released during the week ending September 26.
Consumer spending rose in August. Real Personal Consumption Expenditures (PCE) increased by a seasonally adjusted 0.4 percent, matching July’s rise and surpassing the 0.3 percent increase reported in June by the Bureau of Economic Analysis. Spending on goods surged 0.7 percent, with gains for both durables (+0.9 percent) and nondurables (+0.5 percent). Expenditures on services rose 0.2 percent. Without adjusting for price changes, nominal PCE grew 0.6 percent, driven by 0.4 percent increases in both nominal personal income and disposable income. Real personal income inched up 0.1 percent. The savings rate dipped 0.2 percentage points to +4.6 percent. Over the past year, real PCE has increased 2.7 percent, while real disposable income grew 1.9 percent. The PCE price index rose 0.3 percent (up from July’s 0.2 percent), and the core PCE price index (excluding food and energy) increased 0.2 percent. On a year-over-year basis, both inflation measures—the PCE price index (+2.7 percent) and the core PCE price index (+2.9 percent)—remained above the Federal Reserve’s two-percent inflation target.
The U.S. economy expanded in Q2 more quickly than previously believed. Real Gross Domestic Product (GDP) rose 3.8 percent on a seasonally adjusted annualized basis. This was a half percentage point revision upward from the previous estimate of Q2 GDP by the Bureau of Economic Analysis, mainly due to higher-than-expected consumer spending levels. Contributing positively to economic growth were (in order) net exports, personal consumption, nonresidential fixed investment, and state/local government spending. Factors pulling down economic activity included (in order) changes in private inventories, federal government spending, and residential fixed investment. Corporate profits grew slightly, with a 0.2 percent annualized increase during Q2, totaling a 3.6 percent rise over the past year.
Economic activity picked up in August. The Chicago Fed National Activity Index (CFNAI) improved by 16 basis points to -0.12. A reading between zero and -0.70 suggests the U.S. economy expanded below its historical average. Only 27 of the CFNAI’s 85 components contributed positively to the index, while the remaining 58 pulled it down. Among the four component categories, those related to personal consumption/housing added positively, those for sales, orders, and inventories had a neutral effect, and those for production and employment acted as drags on the economy. The CFNAI three-month moving average gained two basis points to -0.18.
Existing home sales held steady in August. The National Association of Realtors reports that sales of previously owned homes slipped 0.2 percent to a seasonally adjusted annualized rate (SAAR) of 4.00 million units. Sales declined in the Northeast and South but increased in the Midwest and West. Sales were 1.8 percent ahead of their year-ago levels. The number of unsold homes declined 1.3 percent to 1.53 million units (+11.7 percent versus August 2024), the equivalent of a 4.6-month supply. The median sales price of $422,600 was up 2.0 percent from the previous year. NAR expects a “boost” in sales due to declining mortgage rates and increased inventory.
Consumer sentiment drifted down in September. The University of Michigan Index of Consumer Sentiment declined by 3.1 points during the month to a seasonally adjusted 55.1 (1966Q1=100). (The preliminary September reading reported a few weeks ago was 55.4). The index was 21.4 percent below its year-ago level. The current conditions index lost 7/10ths of a point to 60.4, while the expectations measure decreased 4.2 points to 51.7. The press release noted that sentiment declined among Republicans and independents but improved among Democrats. Consumers expect prices to rise 4.8 percent over the next 12 months, with long-run inflation at +3.7 percent.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending September 20, 2025, First-Time Claims, seasonally adjusted): 218,000 (-14,000 vs. the previous week, -2,000 vs. the same week a year earlier). 4-week moving average: 237,500 (+5.4% vs. the same week a year earlier).
- New Home Sales (August 2025, Sales of Single-Family Houses, seasonally adjusted annualized rate): 800,000 (+20.5% vs. July 2025; +15.4% vs. August 2024).
- Durable Goods Orders (August 2025, New Orders for Manufactured Goods, seasonally adjusted): $312.1 billion (+2.9% vs. July 2025).
The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.
What We Learned About the U.S. Economy Last Week 