This in-depth analysis explores the long-term relationship between disposable income and spending growth in the U.S. economy, using 15 years of FRED data. It examines how real disposable personal income and real personal consumption expenditures have generally tracked similar trends, averaging just over 2.5% annual growth.
The article highlights the impact of major fiscal stimulus payments in 2012, 2020, and 2021, showing how temporary spikes in disposable income led to delayed but noticeable changes in spending behavior and savings rates.
It also covers the recent rebound in income and spending growth through 2023 and 2024, fueled by rising wages and equity markets. As of April 2025, both metrics are growing around 3%, but rising debt burdens and increasing credit card delinquencies suggest challenges ahead.
This comprehensive overview provides valuable insights into how disposable income and consumer spending trends are evolving in today’s economic environment.
Trends in U.S. Disposable Income and Spending Growth: What 15 Years of Data Reveal
The relationship between what households earn and what they spend has always been a cornerstone of economic analysis. A closer look at the past 15 years of U.S. economic data reveals that real disposable personal income (RDPI) and real personal consumption expenditures (RPCE) have consistently followed similar long-term trends.
According to the data presented by the U.S. Bureau of Economic Analysis via FRED, both indicators have averaged just over 2.5% year-over-year growth. However, this steady rhythm has been disrupted at various points, especially by policy interventions and economic shocks.
One of the most significant disruptions to this trend came in the form of one-time fiscal stimulus payments, which were designed to boost household spending during times of economic stress. These payments caused temporary surges in disposable income, followed by predictable declines. A clear example can be seen in December 2012, when disposable income spiked by 5.8% due to stimulus efforts, only to fall by 4.6% a year later in December 2013.
Similar but more dramatic spikes occurred in response to the pandemic-driven economic crisis. Massive fiscal packages led to noticeable increases in RDPI in April 2020, January 2021, and March 2021. But these spikes were followed by declines as the stimulus effects wore off. Interestingly, the immediate consumption response was muted. Many households chose to save rather than spend the windfall, leading to a sharp increase in the personal savings rate.
Over time, these savings were drawn down, fueling a delayed rise in consumption growth. As a result, consumption eventually increased, and the savings rate even dipped below pre-stimulus levels. By 2023, the momentum created by those earlier payments began to fade, and the U.S. economy transitioned back to a more normalized state.
Despite the waning effect of stimulus, other economic forces stepped in to sustain growth. Strong wage increases and rising equity markets helped boost disposable incomes across much of 2023 and 2024. This continued strength helped maintain healthy consumption levels, even as savings buffers thinned.
As of April 2025, the most recent data indicate that both income and consumption growth are converging near the 3% mark. This is notably higher than the 15-year average and signals a robust underlying demand. However, while aggregate figures paint a positive picture, they don’t capture the full story.
Many households are increasingly strained under the surface. A growing share of income is being used to service debt, and credit card delinquency rates continue to rise. This suggests that while overall consumption may appear healthy, it is being partially financed through borrowing rather than wage-based income for some segments of the population.
The dynamics between income and spending will remain a vital area to monitor, especially as the Federal Reserve navigates monetary policy, and fiscal policymakers consider the long-term effects of past stimulus measures. With disposable income and spending growth once again aligned—but under very different economic conditions—the next phase of the U.S. economy may reveal deeper shifts in household financial health and consumer behavior.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. All data is sourced from the U.S. Bureau of Economic Analysis via FRED. Readers should conduct their own research or consult with a financial advisor before making any financial decisions.