Goldman Sachs is doubling down on the consumer even as the U.S. economy fractures along income lines. In a new dashboard, the bank argues household spending should remain solid in 2026 thanks to strong balance sheets, tax-refund tailwinds and still-elevated wealth for asset owners. Under the surface, the picture is split. Higher-income cohorts, lifted by stocks and home prices, are driving aggregate demand, while lower- and middle-income families without asset cushions face softening jobs, elevated borrowing costs and stubborn price pressure on essentials. That divide is already shaping retail winners and losers and will sit at the center of bank earnings, margin commentary and guidance in the weeks ahead.
Goldman says the consumer will keep spending, pointing to a sturdy trend into the holidays and a projected refund impulse of roughly 100 billion dollars in the first half of 2026. Core retail sales rose 0.8 percent in October in nominal terms and 0.7 percent in real terms, with real consumer spending up 2.4 percent year over year through September. The bank forecasts 2.2 percent real spending growth in both 2025 and 2026 on a Q4 over Q4 basis. That top-down resilience stands against a cooling jobs backdrop. The unemployment rate ticked up to about 4.6 percent in November, and Goldman pegs underlying job creation at roughly 32,000 per month versus its 70,000 breakeven. The house view: growth stabilizes the labor market next year at around 4.5 percent joblessness, but risks skew toward further weakening. In other words, total spending holds up while dispersion widens inside the averages.
The wealth channel remains the swing factor. Net worth relative to disposable income is near records, powered by equity gains and housing that refuses to roll over. That cushion supports upper-income purchases and services demand even as the savings rate, which dipped to 4.0 percent in September, drifts back toward 5 percent by late 2026. RBC Economics has framed it bluntly: the top fifth of earners, flush with appreciating assets, are driving consumption growth. Federal Reserve Chair Jerome Powell has acknowledged the K-shaped split and questioned its durability. The concentration is not just about portfolios. Access to cheap fixed-rate mortgages and home equity lines is bifurcating borrowing behavior. For households with equity, HELOCs are growing briskly. For those renting or rolling variable-rate debt, the reality is tighter.
Goldman’s dashboard flags stabilizing delinquency rates overall, but stresses pain points in auto loans to subprime borrowers, particularly vintages from 2022 and 2023, where charge-offs remain elevated. Consumer credit growth is soft, running a little above 2 percent year over year, even as home equity loans expand at a roughly 6 to 7 percent annualized pace on recent measures. That split will be front and center as big banks report. Card lenders and regional banks with deep exposure to lower-income borrowers will face questions on roll rates and loss normalization, while money center banks will lean on affluent clients, wealth management fees and resilient card spend at the high end. Expect CEOs to talk about “healthy but cautious” and emphasize that credit normalization is occurring off abnormally low baselines.
On the equity side, Goldman’s consumer team has been explicit: they see opportunity in nicotine, energy drinks, candy and beauty. It is a playbook built for a K-shaped world. Value and staples-adjacent treats hold their ticket with lower to mid-tier consumers, while prestige beauty and wellness sell-through at the top persists. Look for the barbell: warehouse clubs and premium brands on one end, dollar formats and convenience indulgences on the other. Walmart and Costco continue to capture trade-down and cross-shopping, while Amazon picks up share with higher-income households pressed for time. The middle remains the question. Some broadline and apparel chains face traffic volatility as inflation on essentials crowds out discretionary baskets. Diskounters geared to the lowest-income ZIP codes are experiencing mix pressure and higher shrink costs, and their customer is the least shielded from funding shocks when tax season ends.
Goldman anticipates a modest pickup in real disposable income growth into 2026, aided by expected tax cuts embedded in the One Big Beautiful Bill Act and a fading tariff drag. The firm sees real disposable income growth accelerating to about 2.7 percent on a Q4 over Q4 basis in 2026. But policy is also pulling in opposite directions. Cuts to Medicaid and SNAP would weigh on the bottom quintile, compounding the impact of higher debt service burdens and spotty job gains. That is why headline confidence readings can remain depressed while spending clears. The University of Michigan’s sentiment index has improved off lows, but the Conference Board’s gauge slipped recently, and the most timely daily trackers are volatile. Soft sentiment paired with strong high-end spend is a hallmark of this phase.
The stock market’s leadership is amplifying the split. AI-linked names and capital expenditure have outsized influence on growth and wealth effects. Research estimates indicate AI categories represented a single-digit share of GDP in early 2025 but drove a large portion of incremental growth. That concentration lifted paper wealth for investors holding mega-cap tech, drove option-fueled gains and supported high-ticket outlays. For equity investors, the K-shape is less an abstraction than a framework for positioning. Luxury autos and consumer electronics tied to affluent buyers hold up longer. Mass-market discretionary exposed to paycheck-to-paycheck budgets is more cyclical. The broader S&P 500 benefits from the wealth tailwind until it doesn’t; if labor softens more quickly than wealth, volatility rises as multiples collide with falling breadth.
The next test arrives with refund season and holiday read-throughs. If the projected 100 billion dollar refund boost hits early and on schedule, January and February traffic should look better than sentiment suggests. Watch how retailers talk about promotions and shrink; margin discipline has been the buffer against soft units, but a deeper discount cycle would chip away at earnings. Bank results will set the tone on delinquencies, especially in auto and private-label cards, and on whether credit normalization is plateauing. At the macro level, keep an eye on payrolls revisions, job openings, and the duration of unemployment spells. A labor market that weakens at the margin without a shock is a K-shaped accelerant: it dents the bottom and barely touches the top.
The market is already trading the split. Affluent-facing platforms, subscription services and trade-down beneficiaries continue to outrun mid-tier discretionary. Consumer packaged goods with pricing power and modest elasticity still have levers. In cyclical consumer, the defensible strategy remains a barbell: own high-end exposure tethered to wealth and own scale retailers that win share as budgets stretch. For risk, watch auto credit and unsecured card cohorts for inflection. Morgan Stanley’s Lisa Shalett put it plainly: genuine cracks are emerging for mid- to lower-end consumers. Goldman’s dashboard says the aggregate consumer can carry 2026. Both can be true. In a K-shaped economy, averages tell you less. The path forward will be decided by how long asset markets levitate and whether labor finds a floor before credit stress broadens. Investors who read the split, not just the headline, will have the edge.
