Goldman Sachs warns of consumer spending slowdown as tax refund boost fades

Goldman Sachs warns of consumer spending slowdown as tax refund boost fades

Brian Sozzi · Executive Editor

Mon, August 17, 2026 at 3:55 PM GMT+3 3 min read

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The US consumer has displayed remarkable resilience this year amid high gas and food prices. But that resilience may soon be put to the test, Goldman Sachs economists warned.

The call: Sales among consumer-facing companies rose at a healthy pace in the second quarter, Goldman Sachs economist Jan Hatzius wrote in a new note. Powered by higher-than-planned tax refunds, second quarter sales at consumer companies rose 5.9% year over year among the median S&P 500 consumer discretionary company and 3.9% for the median consumer staples company.

The strength in consumer spending was broad-based, with same-store sales — a key metric for retailers — accelerating for companies serving both lower- and higher-income consumers.

Clouds are on the horizon, though.

"We expect sluggish consumer spending growth ahead," Hatzius wrote. "Although Friday's drop in July retail sales partly reflected the negative impact of an earlier-than-usual Amazon Prime day, the revised sequential path now looks much more consistent with our view that the strength of real consumer spending in the spring was the temporary byproduct of the tax refund surge. We expect real consumer spending growth to slow to 1-1.5% in the second half as real cash flow stagnates."

Something to keep in mind: The US economy expanded at an annualized rate of just 1.5% in the second quarter, marking a deceleration from the 2.1% growth recorded in the first quarter.

Despite the headline slowdown, consumer spending accelerated to a 3.2% annualized pace — up from a sluggish 0.5% in the first quarter — serving as the main engine for underlying private domestic demand.

Household expenditures were boosted by spending across both goods and services, particularly in prescription drugs, motor vehicles, and food services.

"The consumer is OK and stable," Procter & Gamble CFO Andre Schulten said on Yahoo Finance's Opening Bid in late July.

Schulten explained that P&G is seeing divergent trends among consumers, however. Higher-income consumers are continuing to spend on P&G's latest innovations. But lower-income shoppers living paycheck to paycheck remain cautious in how they replenish items and what they take off the shelves.

The bottom line: Goldman's second-half consumer spending slowdown thesis will be put to the test this week with earnings and outlooks from Home Depot (HD), Lowe's (LOW), Walmart (WMT), and Target (TGT). Of all the names, Walmart should be the most in focus, particularly given its outlook for the third quarter.

"Incremental sales upside may be difficult to generate in a cautious and potentially more promotional consumer backdrop," Deutsche Bank analyst Krisztina Katai wrote about Walmart in a note.

Brian Sozzi is Yahoo Finance's Executive Editor, host of the 'Power Players With Brian Sozzi' podcast and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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