The US consumer remains a key engine of economic growth, with personal spending rising 0.60% month-over-month (MoM) in September 2025. This figure exceeds both the 0.50% forecast and last month’s 0.50% increase, signaling sustained momentum. Over the past year, spending has averaged approximately 0.30% MoM, making the recent uptick notable. The data reflects broad-based strength despite headwinds from tighter monetary policy and geopolitical uncertainties.

Drivers this month

• Shelter costs contributed 0.18 percentage points (pp), continuing to support spending growth.
• Durable goods purchases rose moderately, adding 0.12 pp.
• Services spending, especially in healthcare and recreation, increased by 0.15 pp.
• Used car sales declined slightly, subtracting -0.05 pp.

Policy pulse

The 0.60% increase sits above the Federal Reserve’s inflation target of 2% annualized, suggesting ongoing consumer demand pressure. This may complicate the Fed’s path toward rate normalization, as spending growth remains robust despite recent rate hikes.

Market lens

Immediate reaction: The US dollar index (DXY) strengthened 0.30% within the first hour post-release, reflecting expectations of continued Fed vigilance. Short-term Treasury yields (2-year) rose by 5 basis points, pricing in a higher probability of further tightening.

Personal spending is a core macroeconomic indicator, closely linked to GDP growth and inflation dynamics. The 0.60% MoM increase in September 2025 compares with a 12-month average of 0.30%, underscoring a pickup in consumer activity. Core inflation remains elevated at 3.10% YoY, while unemployment holds steady at 3.70%, supporting wage growth and spending power.

Monetary Policy & Financial Conditions

The Federal Reserve’s current policy stance includes a benchmark rate near 5.25%, with forward guidance indicating a cautious approach. Financial conditions have tightened modestly, with credit spreads widening and mortgage rates above 7%. Despite this, consumer credit growth remains positive, reflecting confidence in household balance sheets.

Fiscal Policy & Government Budget

Fiscal stimulus has tapered, with the government budget deficit narrowing to 3.80% of GDP. Recent tax adjustments and infrastructure spending continue to support disposable incomes, albeit less aggressively than in prior years.

External Shocks & Geopolitical Risks

Global supply chain disruptions have eased, but geopolitical tensions in Eastern Europe and Asia-Pacific pose risks to energy prices and trade flows. These factors could influence consumer sentiment and spending patterns in coming months.

Drivers this month

• Shelter costs: 0.18 pp, driven by rising rents and home prices.
• Healthcare services: 0.10 pp, reflecting increased utilization.
• Durable goods: 0.12 pp, led by appliance and electronics sales.
• Automotive: Slight drag from used car sales, -0.05 pp.

Policy pulse

The spending increase exceeds the Fed’s comfort zone, reinforcing the likelihood of maintaining restrictive monetary policy until inflation shows clear signs of easing.

Market lens

Immediate reaction: US Treasury 2-year yields jumped 5 basis points, while the S&P 500 dipped 0.40% as investors digested the stronger-than-expected consumer demand data.

Looking ahead, personal spending growth faces a mix of supportive and constraining factors. Wage growth and labor market strength underpin consumer resilience, but higher interest rates and inflation could dampen discretionary spending.

Bullish scenario (30% probability)

• Continued wage gains and easing inflation boost real incomes.
• Consumer confidence rises, driving spending above 0.70% MoM.
• Monetary policy shifts to a neutral stance by early 2026.

Base scenario (50% probability)

• Spending growth moderates to 0.30–0.50% MoM as rate hikes weigh.
• Inflation gradually declines but remains above target.
• Fed maintains current rates through mid-2026.

Bearish scenario (20% probability)

• Rising borrowing costs and geopolitical shocks trigger spending contraction.
• Consumer sentiment weakens, pushing MoM growth below 0%.
• Recession risks increase, forcing policy easing later in 2026.

The September 2025 personal spending report confirms a resilient US consumer amid tightening financial conditions and geopolitical uncertainty. While the data supports ongoing economic expansion, it also signals persistent inflationary pressures that complicate the Federal Reserve’s policy path. Market participants should monitor wage trends, credit conditions, and external risks closely as they weigh the outlook for growth and inflation.

Key Markets Likely to React to Personal Spending MoM

Personal spending data historically influences equities, fixed income, and currency markets. Stronger-than-expected readings tend to boost the US dollar and Treasury yields, while weighing on risk assets. Below are five tradable symbols with notable correlations to US consumer spending trends:

• SPY – Tracks US equity market sentiment tied to consumer demand.
• USDEUR – Reflects dollar strength influenced by US economic data.
• AMZN – Retail giant sensitive to consumer spending shifts.
• BTCUSD – Cryptocurrency often reacts to risk-on/risk-off sentiment driven by economic data.
• USDJPY – Currency pair reflecting US monetary policy and risk appetite.

FAQs

What is the significance of the US Personal Spending MoM report?

The report measures monthly changes in consumer spending, a key driver of US economic growth and inflation trends.

How does personal spending affect monetary policy?

Strong spending growth can signal inflationary pressures, influencing the Federal Reserve’s decisions on interest rates.

What are the risks to future personal spending growth?

Risks include higher borrowing costs, geopolitical shocks, and weakening consumer confidence, which could slow spending.

Key takeaway: The September 2025 personal spending increase to 0.60% MoM highlights resilient consumer demand, supporting growth but sustaining inflation risks that challenge the Fed’s tightening cycle.