March 2024 Consumer Dashboard

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, rose by 0.26% month over month in February, below consensus expectations, and the year-over-year rate declined to 2.78%.

Headline prices, which include all categories, increased 0.33% on the month and 2.45% from a year earlier.

Spending

Consumer spending increased by 0.8% in February, three-tenths above consensus. Nominal retail sales increased by 0.6% month over month in February, and spending in prior months was revised down. Core retail sales (excluding autos, gasoline, and building materials) was unchanged.

Goldman Sachs Research economists continue to see consumer spending as a source of strength and forecast above-consensus real spending growth of 2.2% in 2024 in Q4/Q4 terms.

Income

Personal income increased by 0.3% in February, one-tenth below consensus expectations, reflecting a 0.8% increase in nominal wage and salary income.

Nominal disposable income (not adjusted for inflation) increased by 0.2% despite a 0.5% increase in personal taxes.

Goldman Sachs Research economists forecast that job gains and strong 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 declined 0.5 percentage points to 3.6% in February, the lowest level since December 2022.

Debt

Consumer credit growth has slowed to 2.5% year over year, 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.

Goldman Sachs Research economists 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 edged down by 0.1 point to 104.7 in March from February. The decrease was led by the expectations component – where the consumer has a more pessimistic short-term outlook. However, consumers’ perceived likelihood of a US recession over the next 12 months continued falling to its lowest level since August 2022.

The University of Michigan’s Consumer Sentiment Index rose to 79.4 in its March final reading, higher than consensus. Commentary from the index provider noted that consumers exhibited confidence that inflation will continue to soften. However, many consumers are “withholding judgment about the trajectory of the economy, particularly in the long-term, pending the results of the US election.”

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