U.S. Personal Income Drops in May as Spending Slows
New government data released Friday shows a surprising drop in U.S. personal income for May 2025, signaling potential headwinds for consumer-driven growth as the economy adjusts to tighter financial conditions and evolving inflation dynamics.
According to the Bureau of Economic Analysis (BEA), personal income declined by 0.4%, or $109.6 billion, on a monthly basis. This marks a sharp reversal from the 0.7% increase recorded in April, raising concerns about the resilience of household earnings.
Disposable personal income (DPI)—the amount Americans have left to spend or save after taxes—also took a notable hit, falling $125 billion, or 0.6%. At the same time, consumer spending (PCE) eased slightly, down $29.3 billion, or 0.1%, after months of steady expansion.
The slowdown in consumption and income appears to be mirrored in savings behavior. Americans saved $1.01 trillion in May, lifting the personal saving rate to 4.5%, up from 3.8% in the previous month, according to BEA estimates.
These figures arrive just as investors and the Federal Reserve weigh incoming inflation data and macroeconomic signals ahead of a potential rate cut in July. With household incomes dipping and consumption flattening, policymakers may face added pressure to act in order to sustain momentum.
Whether the May pullback reflects a temporary pause or the beginning of broader cooling remains to be seen, but the data could prove pivotal in shaping the Fed’s next move.
Alexander Zdravkov
Reporter at Coindoo
Alexander Zdravkov is a person who always looks for the logic behind things. He is fluent in German and has more than 3 years of experience in the crypto space, where he skillfully identifies new trends in the world of digital currencies. Whether providing in-depth analysis or daily reports on all topics, his deep understanding and enthusiasm for what he does make him a valuable member of the team.
