Consumer spending in the United States ticked up modestly in June, but signs of strain are growing among households, according to the latest analysis from Wells Fargo Economics. The inflation-adjusted gain of just 0.1 percent in real personal spending only partially recovers May’s decline, underscoring a broader slowdown in consumption that has emerged over the first half of the year. The June uptick in consumer spending came in at 0.3 percent, narrowly missing Bloomberg Consensus expectations. Yet inflation appears to be eating away much of the spending increase. Both the headline and core Personal Consumption Expenditures (PCE) price indexes rose 0.3 percent during the month, leaving the real—or inflation-adjusted—gain in consumer spending comparatively muted. After rounding, the result is a modest 0.1 percent rise in real spending for June.
This comes on the heels of a 0.2 percent decline in May, meaning real consumer spending remains lower than it was two months ago. Much of the softness is tied to the durable goods category, where real spending has declined for three straight months and in five of the first six months of 2025. Overall, real durable goods spending is down 3 percent since December 2024—a trend that aligns with Wells Fargo’s broader narrative of waning discretionary purchases. The report points to a growing sense of consumer caution: despite an economy that has shown resilience in the face of multiple headwinds, optimism among households remains subdued. Views of the labor market have deteriorated in recent months, and concerns about elevated prices persist. Even with month-to-month volatility, the underlying trend in discretionary services spending has weakened. In June, spending in these categories slipped 0.2 percent, while the annual growth rate dipped further into negative territory—a rare outcome outside of recessionary periods.
Though discretionary goods spending remains above year-ago levels, it too declined 0.2 percent in June. In contrast, non-discretionary goods and services both saw modest gains, suggesting that households are prioritizing essentials over optional purchases—a classic signal of consumer strain. Overall personal income rose 0.3 percent in June, recovering from a weak May distorted by one-off factors. However, wage growth was subdued, rising just 0.1 percent—the slowest monthly gain in nearly a year. Meanwhile, real disposable personal income, which accounts for inflation and tax payments, has softened. Although still supportive of a modest pace of spending, its trajectory suggests diminishing tailwinds for future consumption.
Wells Fargo analysts expect consumption to “muddle along” during the second half of the year. While the slowdown in discretionary purchases may exaggerate underlying weakness, persistent moderation in labor market conditions is likely to continue weighing on household spending decisions. Overall, the June personal spending report from Wells Fargo emphasizes that while consumption has not collapsed, its momentum has clearly slowed. With inflation pressures lingering and labor market gains moderating, household sentiment remains fragile in 2025.
