October 2024 Consumer Dashboard

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

Consumer spending came in above expectations in September where residual seasonality may have boosted the monthly inflation rate. Let’s take a deeper look at Goldman Sachs Research’s analysis.

Personal Consumption Expenditures (PCE)

The core PCE price index, which excludes the volatile food and energy categories, increased by 0.25% month over month in September, and the year-over-year rate fell to 2.65%.

Headline prices, which includes all items, increased 0.18% and the year-over-year rate fell to 2.09%.

Market-based core PCE inflation increased 0.26% month over month. 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 0.5% in September, above expectations. Real personal spending increased 0.4%, reflecting a 0.7% increase in 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 2.7% in 2024 in Q4/Q4 terms.

Income

Personal income increased by 0.3% in September, in line with consensus expectations, reflecting increases in employee compensation, rental income, and transfer income (payment made without exchange for goods or services, such as government benefits) but declines in proprietors’ income and asset income.

Goldman Sachs Research forecasts that continued job gains and strong real wage growth would lead to 3.1% real income growth in 2024 on a Q4/Q4 basis, with positive income growth across all income quintiles.

Wealth

Household balance sheets are still strong as the net-worth-to-disposable personal income ratio and household home equity as a share of GDP remained near their all-time highs. The personal savings rate declined to 4.6%.

Debt

Consumer credit growth picked up in August up 2.3% year over year. Household leverage and debt servicing costs remained low by historical standards.

Credit card delinquencies have shown signs of leveling off recently, as delinquencies increased at a slower pace in the second quarter and auto loan delinquency rates ticked down in September.

Revolving home equity loans have picked up in recent months – suggesting lower rates may be incentivizing some households to tap into a historically large amount of home equity to support spending – although it has slowed more recently as rates repriced higher.

Consumer confidence

The University of Michigan’s Consumer Sentiment Index in October to its highest reading since April 2024. The survey noted that “regardless of the eventual winner [of the US presidential election], a sizable share of consumers will likely update their economic expectations based on the results of the election.”

The Conference Board Consumer Confidence Index, increased by 9.5 points to 108.7 in October – well above expectations – from an upwardly-revised September level. Consumers’ perceived likelihood of a US recession over the next 12 months declined by 2 percentage points to 64.5%, the lowest level since the Conference Board began asking the question in 2022.

Goldman Sachs Research believes the stronger-than-expected consumer spending report highlights the resilience of the US consumer today.