US consumer spending has outpaced disposable income for 24 consecutive months

American consumers have been living beyond their paychecks for two straight years. Real disposable personal income growth has trailed real consumer spending for 24 consecutive months as of mid-2026, the longest such stretch on record dating back to the 1960s. The previous record was roughly 23 months during the late 1970s, a period most economists remember fondly for its stagflation and general economic misery. The numbers paint a grim picture The personal saving rate dropped to 2.7% in June 2026. That’s down from 4.4% in January, a 1.7 percentage point decline in just six months. To put that in perspective, the saving rate has only been lower during brief windows in 2022 and the mid-2000s, right before the financial crisis turned “subprime” into a household word. Meanwhile, credit card balances hit $1.26 trillion in the second quarter of 2026 after a $21 billion quarterly surge. That’s the second-highest level ever recorded. The spending-income divergence is stark in inflation-adjusted terms. Real consumer spending, measured by personal consumption expenditures, grew at approximately 2.6% year-over-year in late 2025 and early 2026. Real disposable income growth struggled to crack ...