June 2025 Consumer Dashboard

Income

Personal income declined by 0.4% in May, below expectations. The decline in personal income reflected a 7.3% decline in Social Security payments after retroactive payments related to the Social Security Fairness Act (that have boosted income in March and April) came to an end.

Proprietors’ income declined 2.3%, reflecting a $41 billion decline in farm proprietors’ income. This comes after payments from the Emergency Commodity Assistance Program boosted farm proprietors’ income by $37 billion on net over March and April.

Employee compensation and interest income all rose in May, while rental income and dividend income declined.

Although the outlook for household cashflow has improved on the back of better tariff news, Goldman Sachs Research expects higher inflation and slower job growth will weigh on real income through to the end of the year and forecasts only 1.4% real income growth in 2025 on a Q4/Q4 basis (compared to 2.3% in 2024).

In addition, Goldman Sachs Research sees headwinds for lower-income households from rising prices and cuts to Medicaid and SNAP benefits and forecasts only 1.0% real income growth for the bottom income quintile in 2025 on a Q4/Q4 basis.

Wealth

Household balance sheets are still strong as the net-worth-to-disposable personal income ratio and household home equity remain elevated. That said, net worth growth slowed to 3.8% year over year in the first quarter of 2025 (compared to 9.1% in the same quarter last year). Wealth accumulation is slowing across all income and wealth groups.

The saving rate stands at 4.5% through May and remains broadly in line with the level consistent with economic fundamentals (e.g., strong household balance sheets, healthy labor market).

Goldman Sachs Research forecasts that the saving rate will edge down to 4.3% by the end of 2025 before ticking back up to 4.8% toward the end of 2026.

Debt

Consumer credit growth remained soft in April, rising 2.1% year over year, although home equity loans continue to grow at a healthy pace.

Household leverage and debt servicing costs remain low by historical standards, and households are not utilizing their excess borrowing capacity to grow spending.

Credit card delinquency rates continued to level off through the first quarter of this year, with new seriously delinquent and new delinquent credit card balances moderating. However, 90-day delinquencies ticked up.

Prime and subprime auto loan delinquency rates ticked down slightly in May on a seasonally adjusted basis but remained elevated.

Consumer confidence

The University of Michigan’s Consumer Sentiment Index rose to 60.7 in the June report, well above expectations and the first monthly increase since December 2024. The survey noted consumers “continue to be concerned about the potential impact of tariffs, but at this time they do not appear to be connecting developments in the Middle East with the economy.”

The Conference Board Consumer Confidence Index decreased to 93.0 in June—well below expectations for an increase—from an upwardly revised May level of 98.4. The Conference Board noted that consumers “were more pessimistic about business conditions and job availability over the next six months, and optimism about future income prospects eroded slightly."

First quarter real GDP growth was revised down to -0.5% annualized for its final reading.  Goldman Sachs Research cautions that first quarter and the upcoming second quarter GDP growth figures are likely distorted from large tariff-driven front-loading effects.

While the full effect of tariffs is still uncertain, financial conditions have eased, and statistical measures of policy uncertainty have pulled back from their peak. Considering these factors, Goldman Sachs Research boosted their forecast for US growth to 1.25% on a Q4/Q4 basis and cut their 12-month US recession probability to 30%.