The government just told us how much money Americans actually kept in July, and the answer is 3 cents out of every dollar. That’s not a character flaw, it’s arithmetic, and this week’s numbers explain exactly where the other 97 cents went. The good news is there’s one move that makes the little you do keep count for a lot more.
On Wednesday, the Bureau of Economic Analysis released its July report on what Americans earned and spent. Personal income rose $115.1 billion, up 0.4% for the month, and disposable income, meaning what’s left after taxes, rose 0.5%. So paychecks moved in the right direction. Spending rose too, by $36.3 billion.
What’s left over is called personal saving, and in July that totaled $712.0 billion nationwide. As a share of after tax income, that works out to a saving rate of 3.0%. Put another way, the average household banked about three cents of every dollar it took home. For context, a rate near 5% or 6% is closer to what the U.S. managed through most of the 2010s.
Here’s the line in that report I’d underline: real personal consumption expenditures, which is spending measured after stripping out price increases, rose by less than 0.1% in July. Basically zero. Americans spent more dollars and got almost nothing extra for them.
That’s because prices kept climbing. The PCE price index, the Federal Reserve’s preferred inflation gauge, was up 3.7% from a year earlier, and 3.3% excluding food and energy. Spending on services rose $86.2 billion while spending on goods actually fell $49.9 billion. Translation: more of your money is going to rent, insurance, utilities, and medical bills, and less is going to things you can carry out of a store.
Consumer sentiment, which is just a survey asking people how they feel about their own finances and the economy, dropped about 8% in August. The University of Michigan’s index landed at 51.0, down from 55.2 in July. Economists had forecast 54.5, so the drop caught the pros off guard too.
The detail that says the most: only 8% of consumers expect their income to grow faster than prices over the next year. In December 2024, that number was 18%. Survey director Joanne Hsu noted the sharpest declines came from older consumers, lower income households, and people without a college degree, the groups with the least cushion when prices move.
J.D. Power surveyed 4,000 people in July and found 34% qualify as financially healthy, holding steady for a second month. That leaves 66% who don’t. And 77% say they’ve changed their everyday spending to keep up with costs: 41% cut back on dining out and entertainment, 32% switched to cheaper brands or stores, and 27% cut back on groceries or skipped meals.
Groceries are still the top source of stress at 43%, but housing is climbing fast at 24% and is close to passing gas prices, which fell to 26%. That’s a meaningful shift. Gas prices you can drive around. Rent and mortgage payments show up every single month whether you like it or not.
If a friend showed me these numbers and asked what to do, I wouldn’t tell them to save more. When your real spending power is flat, “just save more” is advice that solves nothing. I’d tell them to make their existing savings work harder, because there’s free money sitting on the table right now. The FDIC puts the average savings account rate at 0.38%. The best high-yield savings accounts, meaning online accounts that pay a competitive rate on cash you can withdraw anytime, were paying up to 4.50% as of August 27. On a $5,000 emergency fund, that’s the difference between earning about $19 a year and about $225. Same money, same access, same FDIC insurance. Roughly $206 back in your pocket for filling out a form.
Three cents on the dollar is a tight spot, and it isn’t one you talked yourself into. But those three cents can earn about twelve times more than they’re earning today, and that part is entirely within your control this week.
