Once a symbol of financial catastrophe, subprime consumers are now showing signs of resilience and spending power that defy economic uncertainties, according to Goldman Sachs, with the bank highlighting several investment opportunities tied to the lower-income group.
In a note issued Wednesday, Goldman Sachs analysts led by George K. Tong said U.S. subprime consumers—typically defined as individuals with credit scores below 660—are holding up better than expected despite economic headwinds such as tariffs, inflation and high interest rates.
US Subprime Consumers Are Stronger Than You Think
“Our call is that subprime consumers are, and will remain, resilient, with positive spending growth and improving delinquency trends despite economic uncertainty,” Tong said.
Consumer wealth in the bottom income quintile rose 7% year-over-year through May 2025. The labor market remains reasonably healthy, with unemployment at 4.2% in May, while debt service payments as a share of disposable income came in at 11.3%, below the 45-year average of 11.9%.
Household debt stood at 61% of nominal GDP in 2024, the lowest level since late 1999 and significantly under the 20-year average of 70%, suggesting consumers remain financially unburdened.
Goldman said subprime borrowers are actively adjusting their financial behavior by shifting away from discretionary and high-cost items, instead prioritizing …