US Consumer Health Update

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• Upper-income earners (those earning over $100K) seem likely to support overall consumer spending, with a very healthy spending intent reading of 111 (100 is neutral).
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  This pattern—in which lower- and middle-income consumers are in a negative spending stance while the upper-income spending intent score remains positive—would seem to help explain reports suggesting that overall Black Friday revenues were up while unit volumes were down. We speculate that a smaller number of goods are being positioned and sold to higher-income earners as other consumers have been forced to reign in holiday spending. 
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  However, in a negative development, the upper-income outlook score has crossed the neutral line (100) and is heading negative. It fell 2.2 points over the past month, extending a decline of 5.6 points since July. This shift marks a regime change from the post-tariff recovery in this data series. As we establish above, this deteriorating outlook is clearly not affecting these earners’ spending intent this season. Upper-income earners likely have the financial buffers needed to keep their holiday spending at a normal level; we should note these households’ “normal” spending level has been somewhat euphoric in the postpandemic era. However, if we see an enduring pullback or stall in the equities market over the coming months, upper-income spending intent may complete its long return from the euphoria of the Covid-19 era to a neutral level. Retailers who sell to these high-income individuals would likely experience such a trend as a pullback from the typical growth that has materialized in the recent past, even as absolute levels may remain relatively flat. 

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. 

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