Big Upgrade to Health Care Drives Consumer Spending Data, Incomes Recovering

U.S. consumer spending is recovering steadily despite major internal revisions to the data, while improving real incomes are gradually offsetting the weakness seen earlier in 2026.

• Real consumer spending was unchanged in July after the June estimate was revised up by 0.1%, while personal income rose 0.43% and real income increased 0.27% after a 0.16% rise in the PCE price index.
• The largest revision was a 1.8% upward adjustment to June real health care spending, with revised data now showing robust health care spending growth since March instead of zero growth across 2026.
• Basic goods spending grew through 2026 before declining in July, entirely because of online vendor sales; the author attributes this partly to the boost from June’s Prime Day and expects growth to resume from August.
• Second-quarter GDP growth was unchanged at 1.5% because downward revisions to consumer goods, capital spending and trade were offset by upward revisions to consumer services and construction.
• Real incomes fell during the first four months of 2026 as inflation increased, partly because the U.S.-Iran conflict pushed up oil prices, but subsequent job gains have driven a gradual rebound.

Takeaway: The data point to resilient underlying consumer demand and a gradual income recovery, although the magnitude of recent revisions makes the near-term signal unusually uncertain and the author expects further health care revisions in September.