Goldman Finds Consumer Trends Remain Solid Amid K-Shaped Economy Fears

Goldman analysts Scott Feiler and Eric Mihelc updated clients this week with the latest read on consumer health.

The key takeaway: spending trends remain resilient heading into spring, even as the K-shaped economy narrative dominates the news cycle and the Trump administration continues to push affordability measures.

“It seems like consumer trends are still solid. It’s not a clean sweep, but we’re seeing January growth as strong, or stronger than December for most companies we have heard from,” Feiler said.

There was good news earlier this morning: University of Michigan consumer sentiment rose unexpectedly to a six-month high, driven largely by higher-income households benefiting from stock market gains. Economists surveyed by Bloomberg had expected a reading of 55, but the index came in at 57.3. The report also suggests that tariff-linked inflation fears have eased among Democratic-leaning respondents (read the report).

Back to Feiler’s note, where the key takeaway is that consumption trends remain solid:

I wanted to briefly highlight the conversations we are having, inbounds we are getting from investors and stocks in focus on the back of these themes.

1. Health of the Consumer. Fine, Right?: It seems like consumer trends are still solid. It’s not a clean sweep, but we’re seeing January growth as strong, or stronger than December for most companies we have heard from.  Last night, COST beat January sales and saw a 50 bps acceleration vs December. BOOT guided last night and spoke to broad-based acceleration in January comp. CMG spoke to momentum in January. Importantly, Visa provided a table showing acceleration in January trends vs the last 3 months.  There are also expectations for very strong revenues later this morning from TPR, RL & EL.

Bottom-line, any challenges with the market are not a result of any change to consumption trends, which are generally strong.

2. Under The Hood: At this point, it’s not a growth scare. Momentum trades & pockets of TMT are clearly the setter of price each day. Our generally US High Beta Momentum basket was -10% yesterday, its worst day since 2020 and 2nd worst day in the last 20 years. It’s barely a blip on the long-term chart. The difference between this episode and others is most seem to be struggling to pinpoint the exact reason for why (i.e. positioning, technicals, capex surprises, commodities, software worries spreading, etc). It’s not a consumer growth scare though.

3. Are Consumer Momentum Names Impacted?  The Consumer Momentum (high vs low) pair was “only” down -3.7% yesterday, so certainly an impact this week, but not as bad as at the TMT or market level.

4. Which Consumer Stocks Have Been Impacted to the Downside From the Momentum Factor?: The names that did come up in conversations as fitting this theme and seeing some relative weakness were CVNA, SN, ONON, AS, W, CELH, MNST & ROST (albeit small).

5. How are Consumer Investors Feeling?: Consumer Discretionary & Staples have both been substantial outperformers the last week and YTD (+600 bps), with the majority of that spread the last few days. Do investors seem happy about this? Feedback is not that positive, which is supported by outPB data. Why? A few of the pain points have been grocer outperformance, the move higher in WMT (shares short at 8 year highs), general staples strength, some underperformance in off-price and the choppiness in the cruise line pair trades.

6. GARP in Consumer? Expecting pushback here (given a debate about what’s a “reasonable price”). There has been a clear move the last few days into GARP in the market. We can debate whether some of these valuations actually fit the theme but some of the names it has impacted the last few trading sessions are WMT, SBUX in consumer, while Pete Callahan (TMT) highlighted AAPL, DIS, MA, ADI in other sectors. Any good GARP ideas? Happy to discuss as that’s where the search is for, based on feedback with all the other GS sector specialists.

7. Pressure Point Themes: Grocery outperformance, total staples outperformance vs most discretionary and cyclical pockets, momentum underperformance (of course), the lag (last week) in off-price and outperformance of Vegas-centric casinos.

8. Some Consumer Names in Focus:

• WMT to all-time highs TGT rally (covering or real buying?)

• SN weakness (just the momentum unwind? we think yes)

• SBUX small bounce back part of the hunt for GARP (many would disagree the valuation fits GARP)

• AS (part of the momentum factor, or something else?)

• CPRI (one of the most 2-way debated names and active trading stocks on our desk)

9. From PB – 1st Time Since Covid: Yesterday’s moves severely impacted all equity strategies simultaneously, with more than two thirds of funds in each index down (GS PB data). The last time all three strategies were down more than 75 bps in a single day happened during the COVID sell-off.  Systematic L/S was down 76 bps yesterday, the worst day since 2nd October 2025 (still +2.5% YTD). Fundamental L/S down 84 bps (still +2.3% YTD).  Within this, TMT focused managers were down 278 bps on the day. Multi-Strats equity portfolios were down 190 bps, the worst day since 9th April 2025 (still +3.9% YTD).

10. This Table From Our Baskets Team Yesterday is Awesome, With Consumer a Standout:

Separate from Feiler’s note, which presents no immediate alarm about the consumer, are the AI disruption risk and the software sell-off, which have dominated headlines this week.

Here’s the latest from our market desk:

• What’s Priced In? Goldman Says Tech Wreck Leaves Software ‘Cheapest Since 2010’

• Goldman Calls The Bottom For The Historic Software Rout: Here’s Why

• “Room For Relief”: JPMorgan Traders See ‘Rebound Possible’ After Historic De-Grossing

Let’s not forget that last month, Treasury Secretary Scott Bessent promised consumers “substantial refunds” and bigger paychecks this spring as President Donald Trump’s economic agenda begins to deliver results.

The looming threat for the consumer is still the K-shaped economy…

Professional subscribers can learn more about the consumer space on our new Marketdesk.ai portal​​​​.