Lower-income American households are burning through their remaining savings buffers at a pace that Goldman Sachs analysts say will drag real consumer spending growth down to 1.3 percent, well below the trajectory federal forecasters have projected. That figure, if it holds, would represent a sharp deceleration from the post-pandemic spending surge and put direct pressure on retailers, restaurants, and service providers that depend on mass-market demand. The warning arrives as official government data show the personal saving rate already hovering near historic lows, raising the question of how much further households can stretch.
Why a 1.3 percent spending forecast sits below federal baselines
Goldman’s 1.3 percent projection for real personal consumption expenditure growth stands in clear tension with the federal government’s own numbers. The Congressional Budget Office’s long-run outlook for the economy, spanning the next decade, assumes steadier consumption supported by moderate income gains and relatively stable financial conditions, with real GDP expanding at just over 2 percent in the near term. A more recent CBO update covering the 2026–2028 period, available in its short-horizon economic projections, reinforces that relatively optimistic path for household demand.
Goldman’s call falls roughly 0.7 percentage points or more below those baselines, a gap large enough to reshape earnings expectations across consumer-facing sectors if it proves accurate. For retailers and service businesses that operate on thin margins, a slowdown of that size can mean the difference between modest growth and flat or declining same-store sales. It also has implications for tax receipts tied to consumption and for state and local budgets that rely heavily on sales taxes.
The divergence hinges on who is doing the spending and how much room they have left. Aggregate personal income and outlays data, published by the Bureau of Economic Analysis in its income and saving tables, track disposable income, the saving rate, and total personal consumption expenditures at a national level. Those figures confirm that outlays have outpaced disposable income gains in recent quarters, compressing the saving rate. Goldman’s thesis is that this compression hits hardest among lower-income cohorts, whose smaller savings cushions erode faster and whose spending represents a disproportionate share of everyday retail and food-service revenue.
BEA data confirm aggregate cooling but lack income-tier detail
The BEA’s personal income and outlays tables are the canonical source for tracking consumer spending momentum in the United States. They show that overall PCE growth has cooled from the rapid clip seen during the reopening period, and the personal saving rate has trended downward as households spend more relative to what they earn. That pattern aligns directionally with Goldman’s warning of a coming slowdown in real consumption growth.
Yet the BEA publishes these figures in aggregate. The tables do not break out saving rates or consumption by income quintile, which means the specific claim that lower-income households are “running dry” cannot be confirmed or rejected using this dataset alone. Analysts can infer some stress from rising credit card balances or increased use of buy-now-pay-later services, but those indicators are not part of the official income and outlays release and do not provide a clean, income-stratified picture.
The CBO’s projections carry a similar limitation. In its 10‑year budget and economic outlook, accessible through the agency’s long-term projections, consumer spending is modeled as a function of overall income growth, interest rates, and fiscal policy rather than broken out by income tier. A separate CBO document that updates the near-term economic forecast, available in its recent baseline update, likewise presents a single, economy-wide path for real PCE.
Neither set of government projections reconciles its baseline with private-sector forecasts like Goldman’s 1.3 percent figure. The gap between the two forecasts is real, but the publicly available data do not contain the income-stratified detail needed to settle the dispute over how much pressure lower-income households are under or how quickly their spending might slow.
Unresolved questions around lower-income spending strain
Three open questions shape how this story plays out over the rest of 2026. First, Goldman has not publicly released the full model assumptions, data vintage, or sensitivity analysis behind its 1.3 percent projection. Without that transparency, outside analysts cannot replicate the call or stress-test its assumptions about lower-income saving-rate declines or the responsiveness of spending to tighter credit conditions.
Second, it remains unclear how much of the decline in the aggregate saving rate reflects deliberate drawdowns of excess cash versus mechanical effects such as higher prices and interest payments. If lower-income households are mainly contending with rising rent and debt-service costs, they may have less flexibility to cut back on discretionary purchases without affecting essentials, making any slowdown more abrupt once buffers are exhausted.
Third, the policy backdrop could change the trajectory. Additional fiscal support, targeted tax credits, or shifts in monetary policy that ease borrowing costs would all influence the pace of spending. The CBO’s current baselines, which assume no major new legislation, implicitly embed a status quo policy environment. Goldman’s weaker consumption outlook, by contrast, appears to assume that policy does not step in to rebuild lower-income balance sheets.
For now, the data tell a partial story: overall spending is still growing, but more slowly, and households are saving less of what they earn. Whether that benign deceleration gives way to a sharper pullback depends on the financial resilience of the most vulnerable consumers-an area where official statistics remain conspicuously thin and private forecasts, however sophisticated, are still educated guesses.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
