US consumers may be showing signs of stress, but don't expect them to break in 2024.
That's the contention from Goldman Sachs chief economist Jan Hatzius.
Hatzius' latest research sees the consumer outperforming next year amid further healthy gains in incomes.
Hatzius believes the unemployment rate will hold steady in 2024 at around 3.5%, and the economy will create 100,000 jobs a month on average.
"The evidence that has accumulated, especially over the last few months is very much consistent with a soft [economic] landing," Hatzius added.
The more upbeat read on the consumer arrives as the Fed's interest rate hikes ripple through the economy and begin to stunt spending power and weigh on household finances.
Execs at electronics retailer Best Buy (BBY) called out rising credit card delinquencies on its earnings call last week. The C-suites at department store players Macy’s (M) and Nordstrom (JWN) did the same in mid-August.
Online pet retailer Chewy (CHWY) conceded it's seeing more "discerning" shoppers, a similar tone used by Target (TGT) when it reported second quarter earnings.
Hatzius agreed that consumer spending will likely be fueled by higher-income consumers in 2024, with more pressure on lower-income shoppers. The consumer's reaction to the return of student loan repayments this fall is also a wildcard.
"We do think [student loan repayments are] going to be a modest drag on growth in the fourth quarter or maybe in the first quarter [of 2024]," Hatzius said. "It's going to take a few tenths off the increase in real consumer spending."
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Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com.
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