March 2025 Consumer Dashboard

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

US consumer confidence continues to spiral down as concerns grow over the impact of tariffs on inflation and the economic outlook.

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

Personal Consumption Expenditures (PCE)

The February core PCE price index, which excludes the volatile food and energy categories, rose 0.37% month over month, and the year-over-year rate rose to 2.79%.

Headline prices, which include all items, rose 0.33% month over month and 2.54% year over year.

Market-based core PCE inflation increased 0.37% month over month in January. 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 0.4% in February, below expectations (January growth rate was revised down to -0.3%). Real personal spending increased 0.1%, reflecting a 0.7% increase in real goods spending and a 0.2% decline in real services spending.

Goldman Sachs Research economists downgraded their US consumer spending forecasts to reflect the expectation for larger tariff increases. They now forecast real consumer spending growth to increase by 1.9% in 2025 (down from 2.2% previously) in Q4/Q4 terms.

Income

Personal income increased by 0.8% in February, above consensus expectations and partially reflecting a 7.1% increase in other government benefits. Employee compensation, proprietors’ income, rental income, dividend and interest income, and transfer income all rose in the month.

Goldman Sachs Research forecasts inflation to rise this year due to tariffs and a slower pace of job growth. Our economists now expect only 2.0% real income growth in 2025 on a Q4/Q4 basis (down from 2.5% previously). Furthermore, they expect that real income growth will underperform for lower-income households that are disproportionately affected by tariffs in 2025.

Wealth

Household balance sheets are still strong as the net-worth-to-disposable personal income ratio and household home equity remain elevated despite the recent pullback in equity prices.

The personal saving rate rose to 4.6%. Goldman Sachs Research expects the saving rate to edge down to around 4% by end of 2025 before rising back to 5% by the end of 2026.

Debt

Consumer credit growth ticked up in January to 2.1% year over year. Household leverage and debt servicing costs remain low by historical standards.

Credit card delinquencies showed signs of leveling off in the fourth quarter, with new seriously delinquent and new delinquent credit card balances moderating, although 90-day delinquencies ticked up.

Subprime auto loan delinquency rates rose slightly, but prime auto loan delinquencies declined in February.

Consumer confidence

The University of Michigan’s Consumer Sentiment Index decreased to 50.8 in the April preliminary report, below expectations. Uncertainty over the policy and inflation outlook appear to be taking a toll on consumer sentiment and expectations. The survey noted that the decline in sentiment was consistent across all groups and that future expectations for personal finances, labor markets, inflation, and business conditions had deteriorated.

The Conference Board Consumer Confidence Index decreased by 7.2 points to 92.9 from an upwardly revised February level – the largest monthly decline since January 2021. The survey noted consumers remained concerned about “the impact of tariffs” when discussing the rise in inflation expectations.

The combination of larger tariffs, greater policy uncertainty, declining business and consumer confidence, and messaging from the administration indicating greater willingness to tolerate near-term economic weakness in pursuit of its policies increase downside risk.

In response, Goldman Sachs Research lowered its 2025 GDP growth forecast to 0.5% on a Q4/Q4 basis.