January 2025 Consumer Dashboard

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

The US economy continues to signal a healthy consumer through the end of 2024.

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 0.16% month over month in December, and the year-over-year rate ticked down to 2.79%.

Headline prices, which include all items, increased 0.26% month over month, and the year-over-year rate edged up to 2.55%.

Market-based core PCE increased 0.12% month over month in December. 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 0.7% in December, above expectations. Real personal spending increased 0.4% in the same month, reflecting a 0.7% increase in real goods spending and a 0.3% increase in real services spending.

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

Income

Personal income increased by 0.4% in December, in line with consensus expectations, reflecting increases in employee compensation, proprietors’ income, rental income, asset income, and transfer income.

According to Goldman Sachs Research, continued job gains and strong real wage growth should drive 2.5% real income growth in 2025 on a Q4/Q4 basis, with income growth for all income quintiles falling in a relatively narrow 2.4% - 2.6% range.

Wealth

Household balance sheets are still strong, as the net-worth-to-disposable personal income ratio remains near all-time highs due to strong asset price appreciation.

The personal savings rate declined to 3.8% in December. Goldman Sachs Research expects the saving rate will rise to 4.9% by end-2025.

Debt

Consumer credit growth ticked up in November to 1.7% year over year. Household leverage and debt servicing costs remained 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 also saw a slight increase, but prime auto loan delinquencies declined in December.

Goldman Sachs Research believes these recent data support their view that delinquency rates are cresting and should stabilize around current levels.

Consumer confidence

The University of Michigan’s Consumer Sentiment Index fell to 67.8 in the February preliminary report.

The Conference Board Consumer Confidence Index decreased by 5.4 points to 104.1 in January – to a level somewhat below consensus expectations – from an upwardly revised December level.

GDP growth for the fourth quarter rose 2.3% annualized. Our economists believe consumption growth will remain strong this year and currently forecast first quarter GDP growth of 2.3%.