Resilient Spending: January 19 – 23

Consumer spending grew, but the pace of savings contracted this past fall. Here are five things we learned from U.S. economic data released during the week ending January 23. 

Consumers continued spending during the fall. The Bureau of Economic Analysis estimates that real Personal Consumption Expenditures (PCE) increased by 0.3 percent seasonally adjusted in both October and November. Goods spending rose 0.4 percent and 0.6 percent during the two months, while services expenditures increased 0.3 percent and 0.2 percent. Removing adjustments for inflation, nominal PCE grew 0.5 percent in both months. Nominal personal income and disposable income each increased during October and November by 0.1 percent and 0.3 percent, respectively. Real disposable income fell 0.1 percent in October but rose 0.1 percent the following month. The savings rate declined by half a point over the two months to +3.5 percent. The PCE Price Index rose 0.2 percent in both months, as did the core index that excludes energy and food. The headline and core PCE Indices have increased 2.8 percent over the 12-month period ending in November.

The U.S. economy grew at a robust pace last summer. The Bureau of Economic Analysis upwardly revised its estimate of 2025 Q3 real Gross Domestic Product (GDP) by 1/10th of a percentage point to a seasonally adjusted annualized rate (SAAR) of +4.4 percent. The upward revision reflected higher-than-expected levels of consumer spending, exports, government spending, and investment. Positively contributing to Q3 GDP growth were, in descending order, personal spending, net exports, fixed nonresidential investment, and government expenditures. Fixed residential investment and the change in private inventories subtracted from GDP growth. Corporate profits increased by an annualized 4.5 percent during the quarter and have surged 9.3 percent over the past year.

Consumer sentiment slightly improved in January. The University of Michigan’s Index of Consumer Sentiment increased by 3.5 points to a seasonally adjusted 56.4 (1966Q1=100). Despite this rise, the index was 21.3 percent lower than its January 2025 level. The current conditions index went up by 5.0 points to 55.4, which is 26.2 percent below January 2025, and the expectations measure rose by 2.4 points to 57.0, 18.0 percent lower than January 2025. Inflation expectations stayed high but showed signs of easing. One-year inflation expectations sat at +4.0 percent, and long-term inflation expectations increased by 3.3 percent.

Construction spending rose in October. The Census Bureau estimates that the value of construction put in place increased by 0.5 percent to a seasonally adjusted annualized rate (SAAR) of $2.175 trillion. Construction spending remained 1.0 percent below that of a year earlier. Year-to-date construction spending has totaled $1.825 trillion, which is 1.4 percent less than the comparable months in 2024. Private spending grew by 0.6 percent to $1.651 trillion, including a 1.3 percent increase in private residential spending. Private nonresidential construction spending declined by 0.2 percent. Public sector construction edged up by 0.1 percent to $524.0 billion.

Wholesaler sales declined as inventories increased in October. Merchant wholesaler sales decreased 0.4 percent to a seasonally adjusted $913.5 billion. Despite the drop, Census Bureau data showed a 4.6 percent increase compared to the previous year. Sales of both wholesale durable (-0.6 percent) and nondurable (-0.2 percent) goods fell during the month. Merchant wholesaler inventories grew 0.2 percent to $913.5 billion (+1.7 percent versus October 2024). Inventories for nondurables increased 0.8 percent, while those for durables decreased 0.2 percent. The inventory-to-sales (I/S) ratio rose by a basis point to 1.30. The I/S ratio was 1.33 a year earlier. The I/S ratios for durables (1.66) and nondurables (0.96) each increased by a basis point.

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

• Jobless Claims (Week ending January 17, 2026, First-Time Claims, seasonally adjusted): 200,000 (+2,000 vs. the previous week, -22,000 vs. the same week a year earlier). 4-week moving average: 201,500 (-5.5% vs. the same week a year earlier).
• Pending Home Sales (December 2025, Index (2001=100), seasonally adjusted): 71.8 (-9.3% vs. November 2025; -3.0% vs. December 2024). The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.