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- Our Bain/Dynata Consumer Health Indexes (CHI) composite outlook measure fell in April, as consumers continued to signal deterioration. Lower- and middle-income earners appear to be planning to maintain spending in the near term via an increased reliance on debt, which is not sustainable over the longer term. Meanwhile, the upper-income outlook score fell into negative territory in April, and this group’s spending intentions are trending toward neutral. We advise clients that the risks are clearly skewed to the downside, absent a sudden global reduction in volatility.
- Middle-income earners’ intent to spend increased in April, rising from 99.2 to 104.6, a return to positive territory. However, we do not view this as a signal of strengthening consumer fundamentals. Instead, when considered alongside the increase in intent to utilize debt—from 97.3 to 100.9—the data suggests consumers are planning to rely on debt to support higher spending.
- Our other data series reinforce this interpretation. The middle-income outlook declined from 101.4 to 99.7, moving back below neutral. Intent to save increased modestly from 94.4 to 96.2 but remains firmly below neutral, indicating no meaningful rebuilding of financial buffers among these consumers.
- Much like middle-income spending intent, our lower-income spending intent series also seemingly improved in April, increasing from 95.9 to 97.6. However, this demographic group’s intent to utilize debt rose sharply, from 99.1 to 108.0, suggesting that consumers plan to use debt to support their spending. This indicates forced spending in this demographic group rather than an improvement in underlying fundamentals.
- One relative bright spot this month is a noticeable uptick in the lower-income outlook measure, which increased from 95.5 to 99.3. While this month’s reading is merely a single data point, and the series may prove volatile, the increase could suggest that additional labor market deterioration is not expected. To be clear, at just below neutral, the reading indicates stabilization rather than recovery. Consumers are signaling that conditions are not worsening further, not that the labor market is rebounding meaningfully.
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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