According to the Federal Reserve Bank of New York, household spending growth slowed to 4.7% in August, down from 4.8% in April and 4.9% in December 2025. Consumers are shifting their budgets, with more households reporting spending on homes, furniture, and vacations, while outlays for vehicles, electronics, and appliances have declined.
Expectations for total spending growth over the next year rose to 3.6%, up from 3.4% in April. However, expected growth for specific categories like food, transportation, and housing has decreased. Meanwhile, the perceived probability of missing a minimum debt payment over the next three months increased by 1.2 percentage points, reaching 13.2%.
Financial vulnerability remains a key issue for households living paycheck to paycheck. Data indicates that 62% of those with improved financial positions hold more than three months of savings, compared to 26% for those whose finances worsened. Struggling households are increasingly relying on credit cards to cover unexpected expenses.
The Wage to Wallet Index estimates that 60 million workers earning $25 or less per hour contribute over $1.7 trillion in annual spending. These individuals represent 36.5% of the workforce and 15.1% of total consumer outlays. Retailers and payment providers face a landscape where consumers reallocate spending while expecting outlays to outpace income.
