BOSTON, Aug. 21, 2025 -- A souring mood among US consumers is emerging, with adverse shifts across the income spectrum signalling a deteriorating outlook and threatening that a potential downturn in demand may lie ahead, latest results of the Bain & Company/Dynata Consumer Health Indexes (CHI) indicate.
The CHI report's headline outlook gauge for consumer prospects across all US income groups slipped in August, declining to 100.2 from July's 101.0 reading, reflecting the worsening sentiment among American households and a more fragile consumer environment.
The outlook reading for lower-income Americans (earning below $50,000 per year) fell to 96.4 this month, extending a decline that began in June and marking its third consecutive month at the low end of the gauge's range for the past year. Alongside, the August CHI outlook score for middle-income households (earning $50,000 to $100,000 per year), which had stalled for the previous five months, fell 0.7 points to 99.5, taking it below its neutral level of 100 for the first time since mid-2023.
While upper-income consumers (earning more than $100,000 per year) remain in a positive position for now, the Bain/Dynata analysis warns of signs that optimism among this better-off group is rolling over simultaneously across the CHI indicators for outlook, spending intentions, and intent to use debt. In August, the outlook score for upper-income Americans declined by 1.2 points to 104.3; the intent to spend reading rose by only a modest 0.8 points – registering its smallest gain in months; and the gauge for intent to use debt dipped by 0.1 points to 104.1. The report concludes that this pattern of movements, taken together, suggests a meaningful inflection for upper-income consumers may be underway, even though the overall positioning for these earners remains strong at present.
"The consumer is sending negative signals across all income groups. Both lower-income and middle-income households are showing poor outlook readings and upper-income households' optimism is starting to roll over. A delicate consumer is getting ever closer to the edge. We advise businesses to plan for scenarios that include weakening consumer demand for the coming quarters," Brian Stobie, vice president in Bain & Company's Macro Trends Group, said.
August's further worsening in the outlook gauge for lower-income US households provides strengthened evidence of problems in the job market impacting this group, the Bain/Dynata analysis warns. This month's fall comes after July's CHI report cautioned that the lower-income group's declining outlook reading was a signal of deteriorating labor market conditions – a conclusion validated by the subsequent, unusually large downward revisions to prior months' official payroll data. The weaker outlook scores for lower-income Americans are not yet affecting the group's spending intentions, with the CHI gauge of these steady this month at 99.0, the report notes. But it cautions that the spending situation could shift rapidly if sizable job losses begin to be seen in the economy.
Spending intentions for middle-income consumers are also holding steady for now, the CHI data shows. However, the reading for the group's intent to use debt fell by 3.6 points in August, to 95.1, the lowest since August 2020, while the gauge for its savings intentions jumped by 3.4 points to 98.5 – a dynamic that the Bain/Dynata analysis suggests may indicate middle-income earners are battening down the hatches.
The CHI report concludes that US consumers are collectively feeling more pessimistic, even if this shift is not yet apparent in broader economic data. While the outsized role of upper-income earners in US discretionary spending may help sustain overall consumer demand in the near-term, the CHI data points overall to a negative shift in consumers' perceptions of prospects, the analysis finds. In turn, the report counsels that businesses should include scenarios for a weaker consumer outlook in their planning.
Brian Stobie added: "Lower-income households are telling us something is off in the labor market and the recent revisions to the official payroll data back up this signal. For middle-income earners, the housing tailwind that often drives optimism just isn't there this year – and housing weakness is starting to register, with this group bracing for tougher conditions. And while the upper-income consumer is still in a strong position for now, the peak optimism we saw last month took a step back even as markets continue to rally. The signs are that the exuberance of early summer is giving way to something more cautious."
For more details and the full report (PDF), please click here or get in touch with the media contacts below.
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