Goldman Sachs Analysis: The Surprising Strength of Lower-Income Consumer Spending

In the midst of rising credit card delinquencies, Goldman Sachs’ recent findings have painted an unexpected picture of the American consumer landscape. While concerns of a consumer slowdown persist, it turns out that lower-income consumers are defying the odds. In this article, we delve into Goldman Sachs’ insightful analysis of 26 retailers and their consumer bases, shedding light on why lower-income consumer spending remains robust, even in the face of financial pressures.

Lower-Income Consumers Outperform

Goldman Sachs’ senior economist, Spencer Hill, highlighted an intriguing trend: lower-income consumers, with household incomes ranging from $62,000 to $85,000, are outperforming their higher-income counterparts. During the second quarter, stores catering to lower-income customers experienced a substantial 5.6% increase in same-store sales compared to the previous year. These stores included retail giants like Walmart and Ross Stores, as well as dollar store chains such as Dollar General, Dollar Tree, and Five Below.

In stark contrast, retailers targeting higher-income consumers, with median incomes ranging from $96,000 to $128,000, witnessed a 2.2% decline in same-store sales. This group encompassed Bloomingdale’s, RH, Lululemon, and Nordstrom. This unexpected divergence challenges conventional economic wisdom and calls for a closer examination of the factors at play.

Credit Card Data Corroborates the Trend

Goldman Sachs’ analysis aligns with credit card data trends. Since the onset of the pandemic, consumer spending in lower-income zip codes has surged by an impressive 25%. In contrast, middle-income and higher-income zip codes have experienced more modest growth rates of 22% and 16%, respectively. This data underscores the resilience of lower-income consumers in the face of economic challenges.

However, Goldman Sachs anticipates that this spending gap may narrow in the coming months. Various macroeconomic factors are expected to exert pressure on consumers, potentially affecting lower-income shoppers as well. One looming concern is the resumption of student loan payments, which could have a ripple effect on retail sales and overall consumer spending.

The Labor Market Impact

Bank of America’s analysis of card spending data adds another layer of insight. The data reveals that, on a month-over-month basis, higher-income spending lagged behind lower-income spending for a significant portion of the year. This discrepancy is partially attributed to the labor market, where higher-income individuals are experiencing slower wage growth while a greater number are seeking unemployment benefits. These dynamics challenge preconceived notions about the correlation between income levels and consumer spending.

Looking Ahead: The August Retail Sales Report

As investors and economists continue to closely monitor consumer spending trends, the August retail sales report is set to provide further clarity. According to Bloomberg’s survey of economists, retail sales are expected to have increased by a modest 0.1% in August. This represents a notable decrease from the 0.7% surge observed in July. The forthcoming report will offer valuable insights into whether lower-income consumers continue to defy expectations.


In a surprising turn of events, lower-income consumers have emerged as a resilient force in the retail landscape, maintaining strong spending habits even as credit card delinquencies rise. Goldman Sachs’ analysis, supported by credit card data and insights from Bank of America, challenges conventional thinking about the relationship between income levels and consumer spending. As the year progresses, all eyes will be on consumer behavior, and whether the trends observed thus far will persist or evolve in response to changing economic conditions.

Whether it’s the resilience of lower-income shoppers, the labor market’s influence on spending patterns, or the implications of the August retail sales report, one thing is clear: the dynamics of consumer spending continue to surprise and intrigue experts and investors alike.

FAQ 1: Are lower-income consumers really spending more during the pandemic?

Answer: Yes, it may seem surprising, but lower-income consumers have been spending more during the pandemic. According to Goldman Sachs’ analysis, consumer spending in lower-income zip codes has increased by a substantial 25% since the start of the pandemic.

FAQ 2: Why are lower-income consumers outperforming higher-income consumers in spending?

Answer: One key factor is the composition of the labor market. Higher-income individuals have experienced slower wage growth, while more of them have applied for unemployment benefits. This dynamic has contributed to higher-income spending lagging behind that of lower-income consumers.

FAQ 3: Will this trend of lower-income consumer spending resilience continue?

Answer: While lower-income consumers have shown resilience, Goldman Sachs anticipates that the spending gap may narrow in the coming months. Various macroeconomic factors, such as the resumption of student loan payments, could impact retail sales and consumer spending for this group.

FAQ 4: How can retailers target lower-income consumers effectively?

Answer: Retailers targeting lower-income consumers should focus on providing value and affordability. This includes offering competitive pricing, promotions, and products that cater to their needs. Stores like Walmart and dollar store chains have succeeded in this regard.

FAQ 5: What should investors and economists watch for in the August retail sales report?

Answer: In the August retail sales report, it’s essential to monitor the overall trend in consumer spending, especially the performance of lower-income consumers. Any deviations from expectations can provide valuable insights into the ongoing dynamics of the consumer economy.


  1. Lower-income consumers
  2. Consumer spending
  3. Retail trends
  4. Economic analysis
  5. Goldman Sachs
  6. Credit card delinquencies
  7. Retail sales report
  8. Pandemic spending
  9. Labor market impact
  10. Economic resilience

Leave a Reply

Your email address will not be published. Required fields are marked *