Dark clouds are weakening sentiment at both ends of the income spectrum

Americans at the upper end of the earnings spectrum are feeling less confident, but so are those at the lower end.

The widespread weakening of sentiment among American consumers is highlighted in a new report from Bain & Company which reveals concern ranging from job security to investment performance.

Those on lower incomes are most worried about weakness in the jobs market, one of the factors that led to the Fed making its first interest rate cut of 2025.

Sentiment among those who earn less than $50K per year fell for a fourth consecutive month, as measured by Bain’s Consumer Health Index.  The last time the index was as low as it was in August was in early 2021, during the pandemic.

For top earners, those earning more than $100K per year, the index declined for a second straight month, amid a widening gap between expectations for future returns from investments and actual stock market performance which has hit several new highs in recent months.

Brian Stobie, vice president in Bain & Company's Macro Trends Group, says that it is the weaker sentiment among higher earners that is a worry for discretionary consumer spending in the months ahead.

“These higher earners are growing less and less enthusiastic about spending,” he says. “Given that upper-income earners account for the bulk of discretionary household spending, this has clear implications for consumer demand. Last month, we warned that businesses should consider negative scenarios for the consumer outlook. We strongly reiterate that this month as weakness among lower-income households worsens and is now more apparent among upper-income consumers, too."

Conference Board LEI

A further negative reading for the US economy comes from The Conference Board which has published its Leading Economic Index for August, following a decrease in its Consumer Sentiment Index.

The LEI declined by 0.5% in the month following a small increase in July of 0.1% and marking a 2.8% decrease in the six months from February to August 2025. By contrast, there was a 0.9% decrease over the previous six-month period.

"In August, the US LEI registered its largest monthly decline since April 2025, signaling more headwinds ahead," says Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. "Among its components, only stock prices and the Leading Credit Index supported the LEI in August and over the past six months. Meanwhile, the contribution of the yield spread turned slightly negative for the first time since April.”

Monica notes weakness in the labor market with rising unemployment and declining average hours worked in manufacturing, along with softer manufacturing orders.

“Overall, the LEI suggests that economic activity will continue to slow,” she says. “A major driver of this slowdown has been higher tariffs, which already trimmed growth in H1 2025 and will continue to be a drag on GDP growth in the second half of this year and in H1 2026. The Conference Board, while not forecasting recession currently, expects GDP to grow by only 1.6% in 2025, a substantial slowdown from 2.8% in 2024."