U.S. Personal Income & Spending (March 2026)

Consumer Spending Jumps on Higher Gasoline Expenses 

• Personal income jumped 0.6% month-over-month (m/m) in March, ahead of market expectations for a 0.3% increase.
• Consumer spending surged 0.9% m/m in nominal terms – in line with market expectations – driven by increased spending at gas stations. Spending on gasoline jumped 19.2% due to higher prices. 
• When adjusted for inflation, spending growth remained modest at 0.2% m/m. Consumers also cut back gasoline consumption in volume terms, with real sales of gasoline down 1.4% in March. 
• Spending on goods rose by 0.6% m/m in real terms, matching the robust gain seen in the previous month, supported by higher sales of motor vehicles and parts (+2.4% m/m), furniture (+1.5% m/m) and non-durable goods (+0.9% m/m). On the other hand, service spending edged only slightly higher (+0.1% m/m), with reduced spending on transportation services (-0.5% m/m), utilities (-0.3% m/m) and flat spending on accommodation & food services. Spending on recreational services was up 0.4% m/m, following a pullback in the previous month. 
• With spending outpacing disposable income, the personal saving rate dropped to 3.6%, down from the downwardly revised 3.9% in the prior month and the lowest rate since the end of 2022. 
• Inflationary pressures continued to percolate. Core PCE—the Fed’s preferred inflation gauge—rose 0.3% m/m, consistent with 0.3%-0.4% monthly increases seen over the last four months. Annually, core PCE inflation accelerated to 3.2%, slightly up from 3.0% last month.
  
   

Key Implications

• As previously outlined in the retail sales report, consumer spending momentum picked up in March, recovering from earlier months impacted by unfavourable weather. Despite this renewed activity, overall gains in real consumer spending remained modest in the first quarter, rising only 1.6% on an annualized basis—slightly below the 1.9% growth recorded in the fourth quarter of 2025. The influence of higher energy prices was evident in March, as consumers reduced their driving, travel, and visits to restaurants. Nevertheless, spending continued to outpace income growth, leading consumers to draw from their savings and resulting in a declining savings rate.
• The situation around the energy crisis remains uncertain and gas prices are likely to remain elevated for some time (see report). In the near-term, higher tax refund checks – which are running about 11% higher than a year ago – and lower income taxes will partially shelter consumers. However, going forward households may have to pull back on spending to offset higher gas prices and still-elevated inflation.