November 2024 Consumer Dashboard

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

October consumer spending was a touch above Goldman Sachs Research’s expectations. Let’s take a deeper look at their analysis.

Personal Consumption Expenditures (PCE)

The core PCE price index, which excludes the volatile food and energy categories, increased 0.27% month over month in October, and the year-over-year rate increased to 2.80%.

Headline prices, which include all items, increased 0.24% month over month, and the year-over-year rate increased to 2.31%.

Market-based core PCE inflation increased 0.18% month over month in October, reflecting a 0.9% increase in financial services. 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 0.4% in October, in line with consensus expectations. Real personal spending increased 0.1%, reflecting unchanged real goods spending and a 0.2% increase in real services spending.

Goldman Sachs Research economists continue to see the US consumer as a source of strength and forecast real spending will grow by 2.8% in 2024 and 2.3% in 2025 in Q4/Q4 terms.

Income

Personal income increased by 0.6% in October, above expectations, reflecting increases in employee compensation, rental income, transfer income (payment made without exchange for goods or services, such as government benefits), proprietors’ income, and asset income.

Goldman Sachs Research forecasts that continued job gains and strong real wage growth will drive 3.1% real income growth in 2024 on a Q4/Q4 basis, with positive income growth across all income quintiles. They also forecast 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% - 2.7% range.

Wealth

Household balance sheets are still very strong as the net-worth-to-disposable personal income ratio and household home equity as a share of GDP have remained near their all-time highs due to strong asset price appreciation.

The personal savings rate increased to 4.4% in October from a downwardly revised September level. Goldman Sachs Research expects the saving rate will remain around 4.8% by year-end and rise to 5.2% by end of 2025.

Debt

Consumer credit growth ticked down in September to 2.2% 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. Auto loan delinquency rates also ticked down in October.

Consumer confidence

The University of Michigan’s Consumer Sentiment Index increased by 2.2 points to 74.0 in the December preliminary report, above expectations for a smaller increase.

The Conference Board Consumer Confidence Index, increased by 2.1 points to 111.7 in November – in line with expectations – from an upwardly-revised October level. Consumers’ perceived likelihood of a US recession over the next 12 months declined to 63%, the lowest level since the Conference Board began asking the question in 2022.

The US consumer continues to be a source of strength. Goldman Sachs Research expects GDP growth of 2.4% in the fourth quarter.