Goldman Sachs: US Consumer Resilience Masks Deepening Pessimism
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Goldman Sachs reports that the US consumer sector retains resilience, though underlying support appears unstable. As of March, real personal consumption expenditure grew 2.1% year-over-year, and April retail sales demonstrated strength. However, Goldman Sachs attributes this resilience primarily to transient tax cuts and rebates rather than sustainable income momentum. Higher inflation and rising energy prices are expected to pressure spending in the second half of 2026.
The labor market shows temporary stability, with nonfarm payrolls adding 115,000 jobs in April and unemployment holding at 4.3%. Yet, job growth is projected to slow to an average of 38,000 monthly, potentially pushing unemployment to 4.6% by year-end due to macro pressures. Real disposable income remains the weakest link, dropping to a 0.4% annual growth rate in March.
While household balance sheets remain robust with net worth near historic highs, consumer confidence has deteriorated significantly. The University of Michigan sentiment index plummeted to a record low of 44.8 in May. Goldman Sachs anticipates real personal consumption expenditure will grow only 1.5% in the fourth quarter of 2026, falling below the market consensus of 1.7%. Elevated credit card and subprime auto loan delinquencies further indicate stress among lower-income demographics.
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