Fed Data Show Consumers Shift Spending Toward Homes and Vacations

In August, households continued to increase their spending, albeit at a slower pace compared to earlier in the year, as per the Federal Reserve Bank of New York's Household Spending Survey. The median year-over-year growth in monthly household spending stood at 4.7%, a slight dip from the 4.8% seen in April and 4.9% in December 2025.

The survey, conducted quarterly, tracked spending across categories such as groceries, housing, transportation, medical costs, recreation, and more. As spending growth has slowed, households have altered the composition of their major purchases. More households reported spending on furniture, home repairs, homes, and vacations in the past four months than in April, while the spending on appliances, electronics, and vehicles decreased.

Despite this, households anticipate their total spending to rise by 3.6% in the upcoming year, up from 3.4% in April, but the growth expectations have dropped for each individual category. Food remains the top expected expense at 5.4%, followed by transportation at 4.7%, housing at 2.9%, and clothing and recreation at 2.6% each.

The report "The E-Shaped Economy: What Keeps the Middle Standing" from PYMNTS Intelligence highlights different financial situations among consumers. It identifies a significant group of consumers who are still meeting their financial obligations but have limited protection against worsening financial conditions. Among these households, 81% had previously been paying their bills without any issues while still being on the paycheck-to-paycheck bandwagon.

Their vulnerability is closely linked to their savings. However, 62% of those paycheck-to-paycheck households whose finances improved had over three months' worth of savings, compared to 46% of those whose finances remained stable and 26% of those whose finances deteriorated. For those struggling financially, 35% of households facing an emergency had a credit card balance.

They also relied less on cash and more on card balances when dealing with unexpected major expenses, unlike those not living paycheck to paycheck. The August data from the New York Fed further indicates financial strain on the same financing channel. The average perceived likelihood of missing a minimum debt payment within the next three months increased by 1.2 percentage points to 13.2%.

Consumers also reported that obtaining credit has become more challenging than a year ago, and expectations for future credit availability have worsened. Workers earning $25 or less per hour or less than $50,000 annually, who make up 36.5% of employees but 15.1% of consumer outlays, face greater consequences when it comes to income changes.

PYMNTS Intelligence's August "Wage to Wallet Index" estimates that around 60 million of these workers generate more than $1.7 trillion in annual consumer spending. They have the smallest financial buffers and are more likely to experience financial difficulty. For retailers and payment providers, August's spending report suggests more than just a gradual slowdown in household spending.

Consumers are shifting their large purchases while expecting spending to outpace income growth. Yet, millions of households that are meeting their bill obligations have little savings to fall back on in case of financial difficulty.