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Nominal income growth bounces

Published on June 25, 2026

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By

Gerard MacDonell

Nominal income growth was quite strong, outright and relative to expectations, during May. However, that follows weakness last month and general seesaw pattern in prior months. The underlying trend rate of growth here appears to be around 4 to 4 1/2%, at least on a trailing basis. This is similar to how I scored it last month, although in that case I was fading weakness, rather than strength, on the month. This works out to perhaps 1 to 1 1/2% in real terms, after adjusting for what appears to be trend inflation. (Measuring real income with trailing inflation can generate a lot of noise.)

A graph of a line

AI-generated content may be incorrect.
Source: BEA, FH calculations
Data are actual to May.

The personal saving rate was unchanged during May. It has recently been trending lower, reflecting a positive wealth effect and the presumably transitory hit to real income from the earlier energy price strike related to the Israeli-US conflict with Iran. But energy prices have retreated, and we are likely to see a slight pop of the personal saving rate related to that, even as PCE presumably remains moderate. I do not believe the saving rate represents a vulnerability in the expansion.

A graph of a person and person

AI-generated content may be incorrect.
Source: BEA, FH calculations
Data are actual to May.

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