By now, you know the bear case for consumer spending in the US.

Anyone with even a passing interest in markets can recite some version from memory. Pandemic savings buffers are surely exhausted for lower- and middle-income households, student loan payments are set to resume, credit card rates are the highest on record and the Americans most likely to be impacted are those with the highest marginal propensity to consume.

At the same time, the labor market is normalizing, which means job losses and less in the way of bargaining power for workers, notwithstanding the nascent revival of unions in America.

There are mitigating factors, not least of which is the very low share of variable-rate household debt.

As the figure shows, that share has almost never been lower. Of course, it’s probably higher for lower-income families, many of whom rent (i.e., are subject to rising monthly payments for housing) and carry credit card balances.

Other than the “insulation” (if you will) implied by the figure above, what buffers are left for consumers? Or, perhaps better: Are there any tailwinds on the horizon?

According to Goldman, the answer to the latter question is “Yes.”

“Several of the drivers of income growth in 2023 are likely to repeat in 2024,” the bank’s Joseph Briggs wrote, in a recent note. The bank focused on real wage growth and interest income.

Nominal wage growth, Goldman said, should stay “fairly elevated” which, when considered against an ongoing decline in inflation, translates to real wage growth that’ll likely remain “well above 1% through the end of next year.”

“The combination of continued job gains and positive real wage growth should therefore provide a healthy boost to real income in 2024,” Briggs went on.

And then there’s interest income. Households, Goldman reminded market participants, “hold a substantial amount of interest-bearing assets.”

Income from those assets has considerable room to rise, according to Briggs. “Interest income has not yet risen by as much as we’d typically expect based on the increase in interest rates,” he said, referencing the figure on the left below.

The implication is that 525bps of Fed hikes still haven’t worked their way through to household cash flows. Not entirely.

Deposit beta is obviously a hot topic in 2023. Deposit rates, Briggs noted, have some scope to increase based on past cycles. The figure on the right above gives you some context. “Assuming interest rates remain elevated, household interest income should increase,” Goldman added.

Obviously, there are counterpoints and other headwinds that could offset real wage growth. And any “residual” boost from interest income will by definition accrue to households with savings and investments, not the lowest-income families who generally spend every incremental dollar into the economy.

But in our zeal to insist on a “sudden stop” for consumer spending, we shouldn’t overlook factors that might keep consumption supported.

After all, sundry “sudden stop” narratives were wrong all year.