The U.S. consumer spending slowed in September, signaling weaker economic momentum as a soft labor market and higher living costs hit demand. The Commerce Department reported a 0.3% rise in spending, matching forecasts but easing from August’s revised 0.5% increase.
The report, delayed by the record 43-day government shutdown, showed that recent gains were driven largely by high-income households lifted by a stock market rally.
Consumer spending stalled in September as inflation remained stubborn, shutdown-delayed report shows.https://t.co/jLoCPwEtr4
— CNN (@CNN) December 5, 2025
Economists said middle- and lower-income Americans are being squeezed by President Donald Trump’s tariffs and stagnant job growth, creating a K-shaped economy. Goldman Sachs warned that cuts to Medicaid and SNAP will further depress low-income spending in 2026.
Despite the slowdown, third-quarter consumer spending still likely supported GDP growth. The Atlanta Fed estimates 3.8% annualized growth, matching the second quarter.
Inflation remained elevated, with the PCE price index rising 2.8% year over year, though the data is not expected to shift next week’s anticipated Fed rate cut.
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