Fed Data Show Consumers Shift Spending Toward Homes and Vacations

Households continued to spend more in August, although at a slower rate than earlier in the year. The median reported year-over-year increase in monthly household spending was 4.7%, compared with 4.8% in April and 4.9% in December 2025, according to the Federal Reserve Bank of New York’s Household Spending Survey, released Monday (Sept. 21).

Conducted every four months, the survey measures spending across groceries, housing, transportation, medical expenses, recreation and other household expenses.

Consumers have changed the mix of their large purchases as spending growth has moderated. More households reported purchases of furniture, home repairs, homes and vacations during the previous four months than in April. Appliances, electronics and vehicles moved in the opposite direction.

Households expect their total spending to increase 3.6% during the next year, up from 3.4% in April. Yet expected growth declined for every individual category measured. Food remains near the top at 5.4%, followed by transportation at 4.7%. Housing is at 2.9%, while clothing and recreation are each at 2.6%.

Examining the Fault Lines of Financial Pressure

PYMNTS Intelligence’s consumer data help identify where pressures may emerge.

The September report, “The E-Shaped Economy: What Keeps the Middle Standing,” separates consumers who live paycheck to paycheck into those who can pay their monthly bills without difficulty and those who can’t. The distinction identifies a sizable source of potential spending volatility: consumers who are still meeting their obligations but have limited protection against a deterioration in their finances.

Among paycheck-to-paycheck households that recently began struggling with their monthly bills, 81% had previously been paying their bills without difficulty while still living paycheck to paycheck. Their vulnerability is tied closely to savings.

Among paycheck-to-paycheck households paying their bills without difficulty, 62% of those whose finances improved had more than three months’ worth of savings. The figure was 46% for households whose position remained steady and 26% for those whose finances worsened.

A consumer with savings can cover a car repair, medical expense or higher utility bill without immediately cutting another purchase. Consumers without the same reserve have to find the money elsewhere.

Credit is already filling part of that role. PYMNTS Intelligence found that 35% of struggling households facing an emergency carried a credit card balance. Consumers in financial difficulty also used cash less often and carried card balances more frequently when confronting major unexpected expenses than consumers who were not living paycheck to paycheck.

The New York Fed’s August data show pressure on the same financing channel. The average perceived probability of missing a minimum debt payment during the next three months rose 1.2 percentage points to 13.2%. Consumers also reported that credit had become harder to obtain than a year earlier, while expectations for future credit availability deteriorated.

Income changes carry greater consequences among workers with the smallest buffers.

PYMNTS Intelligence’s August “Wage to Wallet Index” estimates that roughly 60 million workers earning $25 or less per hour or less than $50,000 annually generate more than $1.7 trillion in annual consumer spending. They represent 36.5% of employees but 15.1% of consumer outlays.

Labor Economy workers reported lower confidence in their ability to find another job than consumers overall, even though confidence in keeping their current jobs was nearly comparable.

For retailers and payments providers, August’s spending report points to more than a gradual deceleration in household outlays. Consumers are reallocating large purchases while expecting spending to continue outrunning income growth. At the same time, millions of households paying their bills on schedule have relatively little savings separating them from financial difficulty.