May 2025 Consumer Dashboard

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

US consumer sentiment improved in the latter half of May after a temporary tariffs pause was announced on China goods imports. However, concerns about the economic outlook persist.

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

Personal Consumption Expenditures (PCE)

The April core PCE price index, which excludes the volatile food and energy categories, rose 0.12% month over month, and the year-over-year rate declined to 2.52%. March core PCE was revised up by 6 basis points (bps) to 0.09% month over month.

Headline prices, which include all items, rose 0.10% month over month and 2.15% year over year.

Market-based core PCE inflation increased 0.25% month over month in March. 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 rose 0.2% in April, in line with expectations. Real personal spending was up 0.1%, reflecting a 0.2% decline in real goods spending but a 0.3% increase in real services spending.

Goldman Sachs Research notes that the consumer spending outlook has improved following the 90-day pause in the reciprocal tariffs on China. However, our economists forecast only 1.2% real consumer spending growth in 2025 in Q4/Q4 terms (compared to 3.1% in 2024).

Income

Personal income increased by 0.8% in April, above expectations. It reflects a 7% increase in Social Security payments as a result of the Social Security Fairness Act, which eliminated provisions that had cut benefits based on work that was not subject to Social Security taxes.

Employee compensation, proprietors’ income, and interest income all rose in April, while rental income came in flat and dividend income declined.

Although the outlook for household cashflow has improved following the tariff pause, Goldman Sachs Research continues to expect that higher inflation and slower job growth will weigh on real income through year-end forecasting only 1.1% real income growth in 2025 on a Q4/Q4 basis (compared to 2.2% in 2024).

In addition, our economists have downgraded their income growth forecast for lower-income households to reflect larger SNAP and Medicaid cuts and now forecast only 0.5% 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, especially with equity prices recovering their declines following the “Liberation Day” tariff announcements on April 2.

The personal saving rate rose 4.9% in April. Goldman Sachs Research expects the saving rate will move sideways to 3.9% by end of 2025 before edging back up to 4.2% by end of 2026.

Debt

Consumer credit growth rose in March to 1.9% year over year. Household leverage and debt servicing costs remained low by historical standards, although home equity loans continued to grow at a healthy pace.

Credit card delinquencies continued to level off through the first quarter of 2025, with new seriously delinquent and new delinquent credit card balances moderating. However, 90-day delinquencies ticked up despite healthy balance sheets.

Student loan defaults increased sharply following the end of the pause on reporting federal student loan delinquencies, but delinquency rates remained below their 2019 level.

Prime and subprime 60-day auto loan delinquency rates ticked up in April, and 90-day subprime delinquency rates remained elevated.

Consumer confidence

The University of Michigan’s Consumer Sentiment Index was revised up by 1.4 points to 52.2 in the May final report, slightly above expectations. The survey noted that sentiment had “turned a corner in the latter half of May after the temporary pause on China goods.” However, it found that “consumers see the outlook for the economy as no worse than last month, but they remained quite worried about the future.”

The Conference Board Consumer Confidence Index increased to 98.0 in May – well above consensus expectations – from a downwardly revised April of 85.7. The Conference Board noted that roughly half of responses were collected after May 12 when the US and China announced a temporary pause in the retaliatory tariffs imposed in April. The Conference Board noted that “the rebound [in consumer confidence] was already visible before the May 12 US-China trade deal but gained momentum afterwards.”

The first quarter real GDP growth was revised up to -0.2% annualized for its second estimate.

Goldman Sachs Research believes the first and second quarter GDP growth readings this year will likely be distorted due to challenges in measuring the swings in imports around tariff increases as well as unpredictable policy changes.

Aside from the tariffs, recent inflation data has been soft. As a result, Goldman Sachs Research believes the Federal Reserve is still on track to deliver rate cuts once the tariff effects pass and inflation slows.