Americans’ personal savings rate jumped to its highest level in six months in January, as seasonally-adjusted tax expenditures dropped, the Commerce Department’s Bureau of Economic Analysis (BEA) reported Friday.
The BEA report for January 2026 was originally scheduled for February 26, 2026, was rescheduled until Friday due to the record-long government shutdown, spanning from October into November, caused by Congressional Democrats’ refusal to approve a continuing resolution to keep the government open by maintaining previous spending levels.
At 4.5%, the personal savings rate in January rose from 4.0% in December, hitting the highest level since last July when it was also 4.5%. The savings rate is calculated by dividing Disposable Personal Income - which is income remaining (savings) after current taxes and expenditures – by total personal income.
Total personal income increased 0.4% from the previous month, up from December’s 0.3% increase from November. The increase in personal income in January primarily reflected increases in compensation, personal dividend income, and personal current transfer receipts.
Disposable Personal Income (DPI) increased 0.9%, up from December’s 0.3% gain. Adjusted for inflation, DPI rose 0.7% - up from 0.0% in December and the largest increase since March of 2025.
Consumer spending, which accounts for about two-thirds of the U.S. economy, rose 0.4% in January, matching the previous month’s increase.
Monthly taxes declined a seasonally-adjusted 3.2% from December to January. The Social Security Fairness Act signed by President Donald Trump last July went into effect in January, contributing to the decline.
BEA’s Personal Consumption Expenditure (PCE) price index, which factors takes into account higher the cost of goods and services and is used as a measure of inflation, increased 0.3% in January after rising 0.4% in December. Excluding the volatile food and energy sectors, the so-called “core” PCE index advanced 0.4%, the same as it did the prior month.
The PCE index is the Federal Reserve’s preferred inflation measure used in determining interest rate changes in its pursuit of a target inflation rate of 2.0%. The January PCE index rose 2.8% from a year earlier, while the core number increased 3.1%.
