Inflation is raging near 40-year highs; the S&P 500 is down 14% year to date; and U.S. gross domestic product (GDP) has contracted for two consecutive quarters, sparking a heated debate over whether or not the American economy is in a recession.

On top of that, new data from Goldman Sachs shows that U.S. households’ discretionary cash flow, or the amount of money that households have to spend on nonessential items after expenses, has dropped about $600, or 4.2% over the past year.

“This year, we’re looking at negative discretionary cash flow for the first time since the 2008–09 financial crisis,” Goldman’s consumer goods analyst Jason English said in a recent webinar, CNBC first reported.

But there might be some good news for Americans struggling to cope with the rising cost of living. According to the investment bank—things should turn around after Christmas.

Goldman’s analysts expect household cash flows to begin growing again in 2023 as wages rise and inflation cools.

In the first quarter of this year, consumers had 10% less discretionary cash than they did a year earlier, but that should recover to just a 1.2% year-over-year drop by late December, the analysts said. And by the first quarter of next year, the investment bank sees discretionary consumer cash flows rising 2%, followed by a 6% or more jump in the second half of the year.

Goldman’s discretionary cash flow measure adds up current income, government transfer payments, and borrowing, while subtracting essential expenses, to get a better idea of consumers’ ability to continue spending on nonessential items during difficult economic times.

Their positive forecast for discretionary spending is welcome news, given the ongoing decline in Americans’ personal savings rate, which measures savings as a percentage of disposable income.

Even though average hourly earnings in the U.S. jumped 5.2% in July from a year ago, according to the Bureau of Labor Statistics, real earnings, which take inflation into account, declined 3% over the same period. As a result, the personal savings rate is sitting at just 5.1%. That’s down more than three percentage points from pre-pandemic levels. 

Investors will be keeping an eye on the latest personal savings rate data, which is set to come out on Aug. 26, but the news from Goldman Sachs will likely give many hope that the figure may begin to recover in the coming months.

Goldman’s economists also don’t buy the idea that the U.S. economy is already in a recession, arguing further that there is still only a “one in three” chance of a U.S. recession by mid-2023.

And if a recession does come, it’s likely to be “mild,” the economists argue, due to the strong labor market, slowing inflationary pressures, and rising spending on infrastructure projects and climate-related initiatives. 

“The caveats are that a full stop to Russian gas deliveries could trigger a severe downturn in Europe…and the past 2½ years have taught us all not to rule out the risk of ‘unknown unknowns,’” Jan Hatzius, Goldman’s chief economist, wrote in an Aug. 16 research note.