After several weeks of above-average readings, the financial outlook of U.S. consumers declined after taking a significant hit during the first half of February. Outlook fell to nearly two percentage points to 63%, marking the largest week-to-week drop on the Consumer Financial Health Index (CFHI) since June of 2022, before recovering somewhat in the second half of the month.

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What accounts for the abrupt loss in financial outlook? As a living index, the CFHI tracks changing consumer outlook for the next six months by measuring a range of ‘always-on’ questions that span across five key financial areas: debt, income, savings, investing, and credit score. All five of the CFHI indicators fell in February, marking the first time that’s happened this year and bringing the collective monthly score down more than a point to 64.1%.

The largest monthly financial declines were seen in expectations for investments, income, and savings. Compared to today, a growing number of consumers expect in six months time to have:

  • Less in investments, including retirement savings (falling 4.2%)
  • Less income (falling 2.7%)
  • Less money saved (falling 2.1%)
  • Lower credit score (falling 1.1%)
  • More in debt (falling 1.1%)

Although consumer financial health is up among all groups compared to this time last year, Americans are less optimistic today in one area: debt outlook. Additional data show that holds true among Americans of all political affiliations, although Democrats had the largest year-over-year decline in debt outlook.

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The downturn in financial outlook also coincided with declining economic sentiment, as seen in the latest Economic Sentiment Index reading. Declining financial outlook and economic confidence could indicate tightened spending in certain categories in the months ahead. However, the rebound in financial outlook seen during the last two weeks leaves things on more of a positive forward-looking note.

Attitudes change before behaviors do. To stay ahead of how your customers, key consumer segments, and competitor’s customers are feeling about their finances, get in touch. Learn more about the CFHI here.