From Morningstar: 2025-06-03 04:29:00

US consumer sentiment has been shaky due to tariffs and market volatility, but household balance sheets are strong. Consumer spending drives 2/3 of GDP, so a resilient consumer is crucial for economic growth. The labor market and consumer credit data suggest consumers are well-positioned to weather downturns, despite recent slowdowns in spending.

Confidence has rebounded as tariff tensions ease, with consumers feeling more optimistic. Job market stability is key for consumer spending, with unemployment at 4.2% and decent job growth. Even though new tariffs are impacting spending habits, overall consumer spending remains healthy.

Income growth is strong, with disposable income rising in April. This bodes well for consumer spending amid higher inflation. Despite concerns over tariffs, Federal Reserve officials note limited negative impacts on consumer spending data. The consumer is still spending, providing stability for the economy. The stock market bounce is boosting consumer health and confidence through the wealth effect, leading to increased household spending. The Morningstar US Market Index has recovered all April losses and is up over 12% in the past year. Consumer debt levels are sustainable, with debt costs relative to income remaining lower than pre-pandemic levels. Goldman Sachs economists report low household debt costs and stable credit card delinquency rates.



Read more at Morningstar: How Much Longer Will US Consumers Keep Spending?