Stable Consumer Confidence Hides an E-Shaped Spending Divide

Consumer confidence remained steady in August despite two divergent trends in spending behavior. The Consumer Confidence Index saw only a slight decline, while the Expectations Index dropped significantly. Employment conditions improved, with more consumers reporting plentiful job opportunities. However, future job and income expectations remain pessimistic.

When examining the PYMNTS Consumer Expectations Index, the same confidence holds true for different consumer groups. Those without paycheck-to-paycheck lifestyles are improving, while those who rely on payday-to-paycheck are struggling. The gap between these groups has widened to 2.2 points. Interestingly, even as confidence holds up in the present, households with less financial cushion are more likely to struggle with unexpected expenses, carry credit card balances, and use buy now, pay later services.

This suggests that while confidence remains steady, the financial capacity of households will play a significant role in future spending decisions.