February 2024 Consumer Dashboard

March 13, 2024

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

Consumer spending continued to grow in line with expectations despite a downturn in consumer confidence. 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, increased 0.42% month-over-month in January and the year-over-year rate declined to 2.85%, slightly above expectations.

Headline prices, which include all categories, rose 0.34% on the month and slowed to 2.40% from a year earlier.

Spending

Consumer spending continued to grow at a firm pace of 0.2% in January, in line with consensus expectations. Adjusting for inflation, spending declined 0.1% on the month, reflecting a decrease of 1.1% in real goods spending and an increase of 0.4% in real services spending.

Income

Nominal disposable income (not adjusted for inflation) increased by 0.3% despite a 6.0% increase in personal taxes. Our Research economists forecast that job gains and positive real wage growth will support income growth in 2024.

Wealth

Household balance sheets have strengthened following the recent increase in asset prices which could provide a positive impulse to spending growth in 2024. The net worth-to-disposable personal income ratio remains near its all-time high. The personal savings rate edged up to 3.8% in January.

Debt

Consumer credit growth slowed to 2.4% year over year in December and household leverage and debt servicing costs remain low by historical standards.

Auto loan and credit card delinquency rates have risen recently, likely due to a riskier borrower pool, rising interest expenses, and the restart of student loan payments.

Our Research colleagues expect delinquency rates to rise only modestly going forward barring a more significant deterioration in the labor market.

Consumer confidence

The Conference Board’s Consumer Confidence Survey came in much lower than expected, down 4.2 points to 106.7. The decline was led by the present conditions component, and indication of how consumers see current business and labor conditions. The Conference Board noted consumers are less concerned about food and gas prices and are more worried about the labor market situation and the US political environment.

The University of Michigan’s Consumer Sentiment Index also declined 2.1pt to 76.9 in February but remained above the 2023 average of 65.4.

Goldman Sachs Research economists see consumer spending as a source of strength and forecast above-consensus real spending growth in 2024.

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