Here are the latest insights from Goldman Sachs Research on the financial health of the US consumer today.
Consumer confidence reached a new low in September given renewed worries about the economy. The University of Michigan’s Consumer Sentiment Index landed at 48.1 in its final September report (vs. 51.7 in August)—the lowest reading in four months.
The preliminary report for October showed consumer sentiment declined by 1.8 points to 46.3. And the current economic conditions component declined by 6.2 points to 44.7, the lowest reading in the survey’s history.
The University of Michigan noted that “frustration over cost-of-living continues to mount, as consumers across the political spectrum believe that the trajectory of the economy has weakened since the beginning of the year.”
The Conference Board Consumer Confidence Index decreased to 81.9 in September, well below expectations, reaching its lowest level since 2014. The Conference Board noted that in consumers’ write-in responses “references to prices, the high cost of goods and services, and oil and gas prices in particular, rose to new heights.”
Goldman Sachs Research believes part of the persistent weakness in sentiment also reflects a fundamental, downbeat assessment of the state of the world despite relatively strong activity.
Let’s take a closer look at some of the key economic numbers from recent months.
The core PCE price index rose 0.25% in August, somewhat below expectations, and the year-over-year rate now stands at 3.01%, well below expectations.
The year-over-year core PCE was revised downward 0.36 percentage points in July to 2.98%, primarily reflecting the methodological changes to the calculation of the PCE which had a larger effect than expected.
Headline PCE increased 0.31% in August with the year-over-year rate at 3.42%.
Based on the September inflation report, Goldman Sachs Research now expects 3.0% growth for core PCE on a Q4/Q4 basis.
Personal spending rose 0.9% in August, in line with consensus expectations.
Core retail sales (ex-autos, gasoline, and building materials, month-over-month seasonally adjusted) increased 1.4% in August, well above expectations. The increase in core retail sales partly reflected a 0.5-percentage-point boost from a rebound in the nonstore retailers category, which was depressed in July by an earlier-than-usual Amazon Prime Day.
Core retail sales growth was also strong at electronics and appliance stores (+1.6%), and sporting goods stores (+1.2%). Headline retail sales increased 1.2%, also above expectations, partly reflecting a 3.1% month-over-month increase in gasoline spending driven by the rebound in energy prices.
Despite the strength of the September report, Goldman Sachs Research continues to expect consumer spending growth to slow in the fourth quarter of 2026, as the boost to consumer cashflow from larger-than-usual tax refunds that supported spending earlier this year fades and the headwind from higher energy prices remains.
Personal income increased 0.2% in August, below expectations. Year-over-year disposable personal income growth reached 4.8% in August.
The savings rate decreased 0.5 percentage points to 4.1% in August, after a large 1.6-percentage-point upward revision to the savings rate last month driven by an upward revision to the level of disposable personal income (DPI) and a downward revision to personal spending as a share of DPI.
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September job growth was below expectations. The unemployment rate rose 0.03 percentage points to 4.18% in September, reflecting an increase in the size of the labor force.
Nonfarm payrolls increased by 29,000 in September and were revised lower in both August and July. The modest increase in payrolls largely reflected continued strength in healthcare as well as small gains in construction and durable goods manufacturing, likely supported by AI-related demand.
After downward revisions to July and August, both the three-month average of payroll growth and Goldman Sachs Research’s estimate of the underlying pace of job growth based on the payroll and household surveys stand at 51,000 (roughly their estimate of the breakeven pace).
The September jobs report continues the pattern of September payroll growth underperformance when Labor Day is later in the month, as it was this year.
Goldman Sachs Research expects the unemployment rate to remain at 4.2% at the end of 2026.
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