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Consumer spending outpacing income signals a narrowing buffer

May 13, 2026

Consumption has continued to outpace income growth, highlighting a widening imbalance that may not be sustainable over time. Real incomes net of transfers have increased just 0.4% over the past year, while consumption has grown 2.4%, suggesting households are increasingly relying on savings to support spending. This dynamic has pushed the personal saving rate lower, leaving less of a buffer to absorb future shocks. “With little room to continue compressing the saving rate, consumption is likely to begin converging toward the slower pace of income growth,” explains Garrett Melson, CFA®, Portfolio Strategist at Natixis Investment Managers Solutions.

 

Real personal income vs. real consumer spending (12/31/13–3/31/26)
real-personal-income-vs-real-consumer-spending Source: Bloomberg.
  • The personal saving rate has declined to 3.6%, reaching its lowest level since October 2022 and signaling reduced household financial flexibility.
  • Nominal wage growth continues to cool, with private wages rising 3.3% year over year, pointing to limited support for future consumption growth.
  • Consumption strength has been partially supported by wealth effects, which have historically pressured savings rates but may not provide a durable tailwind going forward.

CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.

This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Natixis Investment Managers, or any of its affiliates. The views and opinions expressed may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. Investors should fully understand the risks associated with any investment prior to investing.

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