
Consumer Spending Rose 0.7% in May as Energy Costs and Health Care Drive a Widening K-Shaped Economy
U.S. personal consumption expenditures increased $156.1 billion in May 2026, a 0.7% month-over-month gain that beat the 0.6% consensus forecast and accelerated from a revised 0.4% increase in April. The Bureau of Economic Analysis report, released June 25, showed spending growth driven disproportionately by gasoline, health care, and financial services, categories that reflect rising costs rather than rising demand, while the accompanying inflation data reinforced the Federal Reserve’s increasingly hawkish posture on interest rates. Key Takeaways U.S. personal spending rose 0.7% ($156.1 billion) in May, beating forecasts, with services spending ($94.3 billion) outpacing goods spending ($61.8 billion) The PCE price index rose 4.1% year-over-year, the highest reading since April 2023; core PCE (excluding food and energy) increased 3.4% annually, the highest since October 2023 Personal income also climbed 0.7% ($181.6 billion), well above the 0.4% forecast, driven by farm proprietors’ income and compensation gains The personal saving rate rose to 3.0% from 2.6% in April but remains well below pre-pandemic norms The top 10% of U.S. earners now account for a record 49% of all consumer spending, according to the Mercatus Center, while the top 20% of households hold nearly 72% of total wealth Gasoline and Health Care Account for













































