New Data Shows Why One Consumer Economy Has Become Three

Consumer spending has become less about confidence and more about financial capacity, and that shift is giving banks and payments providers a clearer map of growth opportunities.

That is one of the clearest messages from “The Three-Speed Consumer Economy: How Financial Capacity Is Rewriting Spending Behavior,” the latest Consumer Expectations Index from PYMNTS Intelligence. Traditional measures of consumer confidence no longer tell the full story, with American consumers largely fitting into three financial groups defined by their ability to absorb higher prices and unexpected expenses: One group continues to spend with little disruption, the second group remains financially stable but carefully weighs every purchase, and the third group is facing growing financial strain that limits both spending and optimism. Together, these groups provide a more useful framework for banks, merchants and payments companies trying to understand customer behavior in an uneven economy.

These differences have become more pronounced over the past month. While financially secure households remained relatively stable, consumers under greater financial pressure experienced a sharp decline in their outlook. The result is a larger separation between the strongest and weakest segments of the economy. Rather than signaling broad weakness, the data suggest the consumer economy is becoming more segmented. That gives businesses a clearer picture of where demand remains healthy and where customers are likely to seek greater flexibility, lower costs or more control over their finances.

Key findings:

The financial capacity gap expanded to approximately 21 points. Consumers who do not live paycheck to paycheck recorded a Consumer Expectations Index score of 61.9, while consumers living paycheck to paycheck and struggling to pay bills fell to 40.6. The spread widened from roughly 18 points the previous month, reflecting increasing pressure on financially vulnerable households rather than significant gains among higher-income consumers.

The middle group continued to demonstrate resilience. Consumers living paycheck to paycheck but able to pay their monthly bills held steady at 56.2. That stability suggests many households are still participating in the economy while becoming more deliberate about how and where they spend. For payments providers, this group represents consumers who may value budgeting tools, installment payment options and products that help stretch household cash flow.

Financial stress became more concentrated. Consumers struggling to meet monthly obligations saw their overall Consumer Expectations Index score decline 2.8 points to 40.6, while their financial resilience measure dropped by nearly 4 points. Financially stronger households, by comparison, experienced relatively little change. The data point to an economy where challenges are becoming more concentrated instead of spreading evenly across all consumers.

The broader report also highlights several encouraging developments. Job market confidence remained relatively strong despite weaker views of the overall economy, suggesting many consumers still feel secure about their own employment and income prospects. That resilience helps explain why spending has held up better than traditional confidence measures alone might predict. Consumers may have more selective, but they have not stopped participating in the economy.

For banks, FinTechs and payments providers, the findings reinforce the value of personalization. Consumers with different levels of financial capacity increasingly require different payment experiences, credit products and financial tools. Companies that recognize those differences can strengthen customer loyalty while helping households make informed financial decisions.