Wealthy Americans buck a wider trend on savings intentions, but that may change

Upper-income earners are still spending rather than saving their cash, unlike the behavior of those with more modest incomes, according to new research.

While American consumers in general are showing greater intention to save, the wealthier cohort is not tightening its collective belt so far, although even they are showing signs of scaling back their spending amid economic concerns.

A recent report found that American consumers are showing signs of financial stress in the way they are using their credit cards including a concerning rise in the delinquency rate.

But the new readings of the Consumer Health Indexes from Bain & Company and Dynata provide an analysis of spending and saving habits in the post-pandemic period which reveals that US consumer intentions are trending towards saving rather than spending. Savings intent has increased over the last four months following a year where this was declining.

“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,” said Brian Stobie, senior director in Bain & Company’s Macro Trends Group. “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.”

The increased savings intent ties in with a recent survey which found that more respondents added to their emergency savings that depleted them in the last year.

For better off Americans, while there was sharp decline in spending intentions in January, there has been a rebound in February, boosting the overall spending intentions element of the CHI surveys. But despite the rebound for upper-income earners to 2024 average levels, a deeper dive into the data suggests even among the wealthier cohort, the outlook is weakening.

“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,” said Stobie. “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.”