Four-month uptrend in saving intent suggests reversion to pre-pandemic spending and demand norms as falling consumer outlook gauge gives warning signal for prospects
BOSTON, Feb. 20, 2025 -- US consumers may be reverting to pre-pandemic norms in their behaviors, returning to generally lower spending and higher savings and shifting away from the higher spending habits seen in the post-Covid period, according to the latest findings of the Bain & Company/Dynata Consumer Health Indexes, released today.
The Consumer Health Indexes' headline consumer outlook gauge fell for a third month in a row in February, dropping to 99.8, down 2.2 points from a high in November. The consistent downtrend in this headline reading presents a warning signal on prospects for the US consumer, the Bain/Dynata analysis concludes.
Alongside the back-to-back decline in the outlook readings in the CHI survey, pointing to risks to US consumer prospects, the indexes' gauge of Americans' intention to save is also rebounding. The last four months of survey data on savings intent have risen, reversing a year-long trend where Americans reported a declining intention to save.
The consistently stronger savings intentions seen in the data suggest a broader reversion to long-term, pre-pandemic norms in spending and saving at the expense of consumption growth, the Bain/Dynata report finds. It cautions that, if this emerging pattern persists, it could pose a risk to prospects for retailers' same-store sales ('comps'). The report recommends that businesses monitor performance and sales trends in the early part of the year to determine if demand from their consumers is exhibiting similar signs of a shift back to pre-pandemic levels.
Brian Stobie, senior director in Bain & Company's Macro Trends Group, said: "Our data indicates that consumers may be reverting to pre-pandemic norms across the CHI survey's gauges for overall outlook, intent to spend, intent to use debt, and intent to save. This shift may pose challenges if businesses are basing their expectations for future consumer behaviors on the boom years of the pandemic recovery, when consumers deviated from these norms toward outsized spending."
Falling outlook readings for upper-income consumer point to a souring mood among the better-off Americans – despite bounce-back in spending intentions from steep January drop
While the survey's overall outlook gauge fell further in February, alongside this the CHI survey's composite measure of spending intentions for all US consumers recovered ground from a turn-of-the-year decline. The recovery was driven by a rebound in the spending intent of upper-income Americans, following a sharp 10.8-point fall in January.
The recovery in the overall spending intent reading, across income groups, took this back to a neutral February reading of 100, compared with January's level of 97.9, and in line with the 2024 average for this measure. In January's analysis, the Bain/Dynata report suggested that a February bounce-back in spending intent might be expected, mirroring the pattern of 2024, when a sharp January drop was followed by a subsequent moderate recovery.
The rebound in spending intentions for upper-income Americans, back to average 2024 levels, still leaves this measure below elevated levels seen in the final quarter of last year, however. At the same time, the CHI survey's readings for the consumer outlook among upper-income consumers declined for a third month in a row, falling to 100.7.
Brian Stobie commented: "Upper-income earners signaled an intent to rein-in their spending in January, but that end of year drop in spending intent moderated significantly in our February reading. This suggests that, at least for now, upper-income spending is no longer at imminent risk. Yet upper-income earners' outlook score, which has also been declining since October, has not exhibited the same recovery. We conclude that upper-income spending is not in imminent danger, but that the mood among this key demographic group continues to sour."
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