Americans Spent More in July. They Got Nothing Extra for It.

Published: 08-26-2026, 10:02 am

Americans spent more money in July than they did in June. They did not get more for it.

That is the finding sitting underneath the July PCE inflation report, published Wednesday, August 26, 2026 by the Bureau of Economic Analysis. Consumer spending rose 0.2% for the month, or $36.3 billion. Adjusted for prices, it rose less than 0.1%, or $1.3 billion. Almost the entire gain was price rather than volume.

Gold gave back part of a three-session run. Spot gold traded in the low $4,600s an ounce through Wednesday morning, about 1% below Tuesday’s close, after touching $4,674 earlier. Silver eased too, holding just above $68.

What did the July PCE inflation report actually show?

The PCE price index rose 0.2% in July and 3.7% from a year earlier, according to the Bureau of Economic Analysis release published August 26, 2026. Core PCE, which excludes food and energy, rose 0.2% for the month and 3.3% from a year earlier. Economists surveyed by Dow Jones had expected the annual headline rate to ease to 3.6%.

So the headline came in hotter than forecast while core matched it. The composition, however, tells the sharper story. Services spending climbed $86.2 billion. Goods spending fell $49.9 billion. Households kept paying for the services they cannot easily defer, and they cut back on goods they could postpone.

Two further numbers matter. The saving rate rose to 3.0% from 2.7% in June. Meanwhile the second estimate of second-quarter GDP, released the same morning, stayed at a 1.5% annual rate.

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Why did gold fall when inflation came in hot?

Because gold trades on real yields rather than on inflation itself. A real yield is the nominal Treasury yield minus expected inflation. When a print runs hotter than forecast, traders raise the odds that the Federal Reserve tightens. That lifts expected real yields, which raises the cost of holding an asset paying no interest.

Oil is working against gold this week too. Crude fell for a third straight session on talks between Iran and Oman about reopening a shipping corridor through the Strait of Hormuz. Cheaper energy pulls near-term inflation expectations down. Today’s pullback therefore has two drivers rather than one, and the print was the trigger rather than the whole explanation.

What does flat real spending mean for savers?

Here the release stops being a market story and becomes a savings one. People usually describe inflation as prices going up. The more useful description is that your money buys less. July’s report measures exactly that gap, in the government’s own accounts.

Core PCE has run above the Federal Reserve’s 2% target every month since April 2021, when it jumped to 3.1% from 1.8% in March, according to Federal Reserve Bank of Dallas data. That makes the July print the 64th consecutive month above target. At July’s headline pace of 3.7%, a dollar loses roughly 3.6% of its purchasing power each year. Hold that pace for five years and the compounding takes about 17%.

A 3.0% saving rate still leaves you very little cushion against that. Consequently savers look for assets outside the banking system. Gold and silver pay no coupon, and they carry no counterparty either. Their case rests on that arithmetic continuing to hold, not on a forecast.

What should gold and silver holders watch next?

Three dated events. First, Warsh delivers his Jackson Hole keynote on Friday, August 28 at 10:00 a.m. ET, his first as Chair. Second, the FOMC meets September 15 and 16. As of August 24, the CME FedWatch Tool priced September at roughly 60% for a hold and 40% for a quarter-point hike, up from 36% a week earlier. No post-release reading was available yet on Wednesday morning.

Third, and least discussed: the Bureau of Economic Analysis begins its annual update on September 30. That revision reaches back through the monthly personal income and outlays series, not just the newest month. Oxford Economics estimates the methodology changes could restate July core inflation nearer 3%. Notably, that would deliver a lower inflation number without a single price falling.

For why the Fed watches core rather than headline, see our explainer on the difference between core and headline inflation. For the previous print, the first monthly decline since 2020, see our coverage of the June PCE report.

SOURCES
1. Bureau of Economic Analysis — Personal Income and Outlays, July 2026 (BEA 26-39), August 26, 2026
2. Bureau of Economic Analysis — GDP (Second Estimate) and Corporate Profits, 2nd Quarter 2026, August 26, 2026
3. Federal Reserve Bank of Dallas — What is keeping core inflation above 2 percent?
4. Federal Reserve Bank of St. Louis — Between Headline and Core: Inflation Excluding Energy Goods, July 15, 2026
5. CME Group — FedWatch Tool, September 2026 probabilities, August 24, 2026
6. Oxford Economics — US PCE nowcast: Slow progress in easing inflation in July, August 19, 2026
7. GoldSilver — Live gold and silver spot prices, August 26, 2026

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions.  

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