August 2024 Consumer Dashboard

Here are the latest insights from Goldman Sachs Research on the financial health of the US consumer today.

Consumer spending is roughly in line with expectations towards the end of July, even though the savings rate has dipped.

Let’s take a deeper look at Goldman Sachs Research’s analysis.

Personal Consumption Expenditures (PCE)

The latest economic data showed that the core PCE price index, which excludes the volatile food and energy categories, rose by 0.16% month over month in July, and the year-over-year rate edged up to 2.62%, in line with expectations.

Headline prices, which includes all items, increased 0.16% by the month and the year-over-year rate rose to 2.50%.

Market-based core PCE inflation increased 0.14% month over month. This measure includes PCE components that are deflated by either a detailed consumer price index (CPI) or a producer price index (PPI).

Spending

Consumer spending increased by 0.5% in July, in line with consensus expectations. Real personal spending increased by 0.4% in July, reflecting a 0.7% increase in real goods and a 0.2% rise in real services spending.

Goldman Sachs Research economists view concerns about weakness in consumer spending as exaggerated and maintain their forecast for above-consensus real spending growth of 2.2% in 2024 in Q4/Q4 terms.

Income

Personal income increased by 0.3% in July, above consensus expectations, reflecting a 0.3% increase in wages and salaries. Nominal disposable personal income increased by 0.3%.

Goldman Sachs Research expects that continued job gains and strong real wage growth will lead to 2.4% real income growth in 2024 on a Q4/Q4 basis, with positive income growth across all income quintiles.

Wealth

Household balance sheets remain resilient as the net-worth-to-disposable personal income ratio remains near its all-time high, including among lower-income households.

The personal savings rate edged down to 2.9% – the lowest level since June 2022 – from a downwardly revised 3.1% in June (was previously published at 3.4%). Our economists forecast that savings should recover to 3.9% by the end of 2024.

Debt

Consumer credit growth in June ticked down to 1.8% year over year and remained subdued. Household leverage and debt servicing costs remained low by historical standards.

Credit card delinquency rates continued to rise in the second quarter, but the pace of increase in credit card delinquencies has slowed.

Goldman Sachs Research economists expect delinquency rates to rise only modestly going forward barring an unexpected labor market deterioration.

Consumer confidence

The University of Michigan’s Consumer Sentiment Index increased by 1.5 points to 67.9 in the August report, slightly above consensus expectations. The survey signaled that consumers’ short- and long-run economic outlook has improved.

The Conference Board Consumer Confidence Index increased by 1.4 points to 103.3 in August – above expectations – from an upwardly-revised July level. Consumers’ perceived likelihood of a US recession over the next 12 months remained around 66%.

As the US consumer continues to drive economic growth, Goldman Sachs Research third quarter GDP estimate stands at 2.5% on a quarter-over-quarter annualized basis.