The U.S. economy continues to show remarkable resilience. Despite persistent inflation, high interest rates, and ongoing geopolitical uncertainty, it hasn’t collapsed.
Yet pessimism remains. Just today, Jamie Dimon, CEO of JP Morgan, warned of potential economic deterioration, and even stagflation. His concerns stem from legitimate concerns including the lag effects of tariffs, and political dysfunction. But predicting the future is difficult. With so many competing predictions, it’s difficult to know which warnings to take seriously without examining the underlying data.
That is why, rather than speculate about what might happen, we can assess what is actually happening by focusing on the one thing holding the economy together: the consumer. Consumer spending accounts for roughly 70% of GDP. So if consumers are earning, spending, and managing their debt, the economy is likely on solid footing.
In this piece, let’s walk through the most valuable indicators as they relate to the consumer including consumer confidence, income, employment, spending, and credit to assess where the consumer stands.
Assessing Consumer Health: A Look At the Data
1. Consumer Confidence
Consumer confidence indicators give us an early signal of what consumers are likely to do next. If people feel secure in their jobs and optimistic about the economy, they are more likely to spend. If confidence slips, spending usually follows. This makes confidence data a leading indicator of future economic activity. This data is typically collected through surveys like the Conference Board’s Consumer Confidence Index and the University of Michigan’s Consumer Sentiment Index.
Current Data:
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- Conference Board Consumer Confidence Index rose to 98.0 in May, rebounding from a dip in April (Conference Board). For context, the index averaged around 128 in 2019, before the pandemic.
- University of Michigan Sentiment Index held steady at 52.2, recovering from a May slump to 52.2 (University of Michigan). That’s still well below the pre-pandemic average of 90+.
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What This Means: The rebound in confidence levels, particularly from the Conference Board, suggests a modest improvement from more concerning levels seen earlier in April. These fears were likely related to uncertainty surrounding tariff talks and geopolitical tensions. However, both indexes remain far below pre-pandemic norms, especially the University of Michigan Sentiment Index. Confidence levels at these levels suggest that consumer anxiety about the economic situation remains elevated. The mixed signals reflect a consumer who is still spending, but doing so with caution.
2. Personal Income, Spending, and Savings
To understand the sustainability of consumer spending, we need to look at income and savings. When incomes grow faster than expenses, consumers can save, invest, or spend more. This supports economic growth. We can gauge this through indicators including disposable income, personal consumption expenditures (PCE), and the personal savings rate. These give us a sense of how much fuel consumers have in the tank.
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- Disposable personal income (DPI) is the total amount of income earned after taxes.
- Personal consumption expenditures (PCE) track consumer spending.
- The Personal Savings Rate is the percentage of income that consumers save after personal expenditures.
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Current Data:
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- Disposable Personal Income increased by 0.8% in April (BEA). Compared to a year ago, DPI is up approximately 4.0%.
- PCE rose 0.2%, showing continued strength in consumer demand (BEA). On a year-over-year basis, PCE is up about 5%.
- Savings Rate climbed to 4.9% in April, an uptick from Q1 averages near 4.3% (BEA). However, this remains below the 7–8% range seen pre-pandemic in 2019.
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What This Means: The latest data shows a healthy, but more thoughtful consumer. Income growth remains solid, but the slowdown in consumption (as shown by the PCE) and increase in the savings rate suggests increasingly cautious consumer. The increase in the savings rate is encouraging, however, indicating a potential financial buffer after a long period of below-average savings. While spending momentum has softened slightly, the overall picture still supports a stable and resilient consumer.
3. Employment and Wages
The job market is the foundation of economic stability. It’s the source of income, confidence, and ultimately, spending power. When employment is strong and wages are rising faster than inflation, consumers generally spend more. In turn, this creates a positive feedback loop that drives economic growth.
Current Data:
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- Nonfarm Payrolls added 139,000 jobs in May (BLS), in line with the 149,000 added in April. While this is lower than the 200K+ monthly average in 2023, it still reflects positive growth.
- Unemployment Rate held at 4.2% (BLS), slightly above the 50-year low of 3.4% seen in early 2023.
- Average Hourly Earnings rose 0.4% MoM, up 3.9% YoY (BLS). This slightly outpaces the current inflation rate running around 3.3% YoY.
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What This Means: The job market is one of the most important drivers of consumer health, and right now, the labor market appears healthy. While job growth has slowed modestly from earlier highs, people are still finding work. The unemployment rate remains low, and wages are growing slightly faster than inflation. This means real purchasing power is improving. As long as this dynamic continues, it should support steady consumer spending and broader economic activity.
4. Household Debt and Credit Health
Even a strong labor market and rising incomes can be undercut by excessive debt. Watching debt levels, credit usage, and delinquency trends can be leading indicators that help identify whether consumers are becoming financially overextended. Rising defaults can be an early signal that spending may slow, dragging down economic growth. To assess the health of consumer balance sheets, we can use the following indicators:
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- Household Debt Levels: This measures the total amount of debt carried by consumers, including mortgages, credit cards, auto loans, and other personal loans. Rising debt levels can indicate confidence but also potential overextension.
- Credit Utilization: This reflects how consumers are managing credit and whether they are borrowing more or paying down balances.
- Loan Delinquencies: This shows the percentage of loans that are past due on payments. Increases in delinquencies will suggest that more consumers are struggling to meet their financial obligations.
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Current Data:
- Total Household Debt reached a record $18.2 trillion in Q1 2025, an increase of $167 billion sequentially. This was primarily driven by increases in student loan and mortgage balances, and partially offset by declines in credit card balances and auto loans. (New York Fed)
- Credit Card Debt fell $29 billion in the quarter to $1.18 trillion, after reaching record highs. This is up from under $900 billion in 2019.
- Loan Delinquencies (90+ days) (New York Fed):
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- Credit Cards: 7.04%, up from 6.86% a year ago and the highest since 2012.
- Auto Loans: 2.94%, up from 2.66% a year ago and nearing post-2008 highs.
- All Consumer Loans: 2.45% delinquent, up from 1.54% a year ago.
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What This Means: It strikes me that the headline numbers mask a more complex story. Total household debt is rising, but this was driven primarily by mortgage and student loan balances, while credit card and auto loan balances actually declined in Q1 2025. This suggests some consumers may be trying to rein in discretionary borrowing.
The real concern is the spike in student loan delinquencies. After payments resumed following a pandemic induced pause, the share of student loans 90+ days delinquent surged to 8.04%, up from just 0.8% a year ago. This represents the biggest red flag in consumer credit health. Meanwhile, credit card (7.04%) and auto loan (2.94%) delinquency rates, while elevated, remain relatively stable comparatively.
For now, debt stress appears contained outside of student loans. But if delinquencies start climbing across other categories, it could signal broader financial strain. This is a key trend to monitor heading into the second half of the year.
So, How Is the Consumer?
Taken together, the data paints a clear picture, one that suggests that the consumer remains resilient, but is under growing pressure.
Confidence remains subdued even as employment remains strong. Spending has slowed, but has not stalled. And even as debt levels rise and delinquencies are creeping upward, most consumers are still managing to stay afloat.
The key piece holding everything together is the labor market. As long as people have jobs and real wages stay positive, the consumer has room to maneuver. That is the pillar holding the consumer together.
The data shows us where to watch for cracks. If the unemployment rate climbs or wage growth wanes, the consumer’s resilience will be tested.
Until then, despite all the dramatic headlines and competing predictions, the data says the consumer is still standing, and that bodes well for the economy and the stock market.
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