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- Altogether, February’s CHI data paints a sobering picture. Across income groups, consumers are entering 2026 in cautious or defensive positions, with most major trends across our data series moving in a negative direction. The flat December US retail sales data underscores that what began as warning signals in past CHI reports have now materialized in measured economic outcomes. Taken together, February’s CHI data points to further challenges ahead.
- For conditions to improve meaningfully, we would need to see one of three shifts: a strengthening in labor-market conditions; a meaningful thaw in the housing market; or an improvement in upper-income consumers’ confidence in future portfolio performance. At present, we see little evidence of improvement on any of these fronts. Labor-market data remains weak, housing affordability continues to constrain transactions, and upper-income earners’ outlook for future portfolio performance has deteriorated steadily in recent months, even as markets have posted record highs.
- This last dynamic is particularly concerning. The upper-income consumer outlook has turned negative, while portfolio returns remain high. Although spending intent for this group has not yet crossed into negative territory, it is steadily losing the enthusiasm that characterized much of the post-Covid recovery. This raises a critical question: How would the group that has effectively served as the backstop for consumer demand respond if portfolio returns were to decline in a sustained market correction?
- We are not equity-market analysts, nor are we calling for a market correction this week, month, or quarter. Markets do, however, correct eventually. We believe there is a widespread underappreciation of how exposed consumer spending and, by extension, the broader economy has become to continued equity-market strength. We therefore advise clients to build scenario frameworks with a heavy dose of realism, drawing on a broad set of indicators, from the retail sales data to the latest CHI report.
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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