Part 4/10:
However, beneath these seemingly positive signals, there are troubling signs when we analyze consumer financial health.
The Discrepancy Between Spending and Income
While consumer spending rose, the supporting income data painted a different picture. Disposable personal income, adjusted for inflation, declined by 1% during the third quarter. This contrasts sharply with a 3.5% increase in income during the previous quarter, which then waned in the subsequent months.
Adding to the concern, the personal savings rate fell dramatically from 5.2% in the prior quarter to 3.8%. Such a decline signifies that consumers are dipping into savings more aggressively or possibly relying more on credit, which raises sustainability issues.