US Consumer Health Update

Business operators and members of the press can request a full copy of this month's report here.

• The headline CHI composite outlook score for US consumers held steady in the past four weeks following its steep 5.3-point fall in our April report. It remains firmly in negative territory at 95.1, some 5 points below our neutral reading of 100.
• Consumers across all income groups show signs of destabilization. The weakness in our composite outlook measure is due largely to upper-income earners, who report worsening expectations for their equity investment portfolios. This group’s outlook score of 89.1 is 10 points below our neutral level.
• Our composite intent-to-save score dropped sharply, by 5.1 points, over the last month, led by declines among both middle- and upper-income earners. The middle-income score fell 10.2 points, in the largest single-month decline in the last five years, while the upper-income score’s decline of 8.3 points is the largest on record since January 2018.
• These sharp falls may indicate consumers are anticipating they will save less if they are paying higher prices for goods in the future due to tariffs. But whatever the exact cause, this signal is clear evidence that consumers have been jolted out of their normal equilibrium. While the fall in savings intentions was not mirrored by lower-income Americans (those earning less than $50K/yr), this group’s intent to use debt has risen by 1.3 points over the last month and roughly 5 points over three months. This suggests lower-income earners, who have less available to save after living costs, may expect to absorb some price increases via debt.
• Despite the apparent destabilization, we do not see signs that consumers plan to reduce spending in the immediate near term. Our composite intent-to-spend measure fell by 1.5 points in May, but the reading of 102.0 is still above the long-term neutral level of 100. Intent to spend for upper-income consumers is in positive territory with a score of 106.2; the middle-income score is near neutral at 100.1; and the lower-income intent-to-spend score is just below neutral (98.9).
• These resilient readings bolster our belief that a general consumer spending pullback is not imminent. We suspect consumers will come under pressure and are preparing for such a scenario, possibly at the expense of savings or through use of debt. But we don’t expect overall spending to fall unless unemployment rises and threatens consumers’ absolute spending power.
• This does not mean all businesses are in the clear. While consumers are telling us their overall spending won’t decline in the near term, some businesses may feel consumers are pulling back. As consumers purchase lower volumes of goods for the same amount of dollars, some categories—particularly discretionary categories and those exposed to tariffs—may feel the squeeze.

Bain and Dynata created the Consumer Health Indexes in 2017 to support business decision makers in their near- and midterm planning for their businesses. To achieve this, we have been asking questions that are within the expertise of the people taking our surveys. What are their personal spending plans? What are their saving plans? What is their use-of-debt plan? These are direct, easily understandable questions about survey respondents’ near-term expected behaviors. They require little interpretation, macroeconomic expertise, or filtering through the lens of the political or news cycle. Since 2017, our clients have been using our Consumer Health Indexes as a differentiated data point relative to existing confidence indicators. 

You can request a full copy of our most recent report here.

Learn more

Bain Macro Strategy Platform

Bain's Macro Strategy Platform is a subscription product that provides our clients with a customized macro-surveillance solution.