December 2024 Consumer Dashboard

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

The holiday spending season had a strong showing and inflation came in lower than consensus expectations.

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

Personal Consumption Expenditures (PCE)

The core PCE price index, which excludes the volatile food and energy categories, increased 0.11% month over month in November, and the year-over-year rate edged up to 2.82%.

Headline prices, which include all items, increased 0.13% month over month, and the year-over-year rate increased to 2.44%.

Market-based core PCE inflation increased 0.12% month over month in November. 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 0.4% in November, slightly below expectations. Real personal spending increased 0.3%, reflecting a 0.7% increase in goods spending and a 0.1% increase in services spending.

Goldman Sachs Research economists continue to see the US consumer as a source of strength and forecast 2.8% real spending growth in 2024 and 2.3% in 2025 in Q4/Q4 terms.

Income

Personal income increased by 0.3% in November, slightly below expectations, reflecting increases in employee compensation, rental income, and proprietors’ income but declines in personal income receipts on assets and personal transfer receipts.

Goldman Sachs Research forecasts that continued job gains and strong real wage growth should drive 2.7% real income growth in 2024 on a Q4/Q4 basis, with positive income growth across all income quintiles. They also forecast 2.5% real income growth in 2025 on a Q4/Q4 basis, with income growth for all income quintiles falling in a relatively narrow 2.3% - 2.6% range.

Wealth

Household balance sheets are still very strong, as the net-worth-to-disposable personal income ratio and household home equity as a share of GDP remain near all-time highs due to strong asset price appreciation.

The personal savings rate ticked down to 4.4% in November from an upwardly revised October level. Goldman Sachs Research expects the saving rate will remain around 4.4% by end-2024 before rising to 4.8% by end-2025.

Debt

Consumer credit growth ticked up in October to 2.3% year over year. Household leverage and debt servicing costs remain low by historical standards.

Credit card delinquencies showed signs of leveling off in the third quarter, as new seriously delinquent and new delinquent credit card balances ticked down, although 90-day delinquencies ticked up slightly.

Subprime auto loan delinquency rates ticked up slightly, but prime auto loan delinquencies declined in November. Goldman Sachs Research believes delinquency rates are cresting and should stabilize around current levels.

Consumer confidence

The University of Michigan’s Consumer Sentiment Index increased by 2.2 points to 74.0 in the December preliminary report, above expectations for a smaller increase.

The Conference Board Consumer Confidence Index decreased by 8.1 points to 104.7 in December — well below consensus expectations — from an upwardly revised November level.

The Conference Board noted that “mentions of tariffs increased in December” and a special question “showed that 46% of US consumers expected tariffs to raise the cost of living while 21% expected tariffs to create more US jobs.”

Goldman Sachs Research sees consumer spending remaining strong, and forecast fourth-quarter GDP growth of 2.3%.