Consumer Income and Spending Outlook Under Higher Inflation

Goldman Sachs warns that the exhaustion of tax refunds and high energy prices will cause US consumer spending to slide in late 2026. Despite strong household balance sheets, weak real income growth and a falling savings rate present significant economic risks.

Key Takeaways

• 1.The temporary boost to household income from the 2026 tax refund season ($140bn) has been largely exhausted and offset by high energy prices.
• 2.US personal savings rates have slumped to 2.6%, the lowest since the pandemic, as spending growth outpaces flat income.
• 3.Goldman forecasts real income growth to slow to just 1.3% for 2026, with significant headwinds for the second half of the year.

Table of Contents

• Refunds Are Up, But Americans Aren't Feeling Tax Law's Benefits
• Exhibit 16: Average refunds continued to be up for all income cohorts, though most for higher-income households
• Exhibit 2: We Expect Softer Spending Growth in 2026H2
• Exhibit 5: Household Balance Sheets Are Still Very Strong
• Exhibit 7: Consumer Sentiment Has Pulled Back Sharply Since the Start of the War in Iran
• Exhibit 1: Our US Consumer Dashboard Points To Weak Income Growth and Consumer Confidence but Strong Balance Sheets

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