4 minute read 28 June 2023

Consumers navigate financial ups and downs

Deloitte’s financial wellbeing index reveals an unfolding story of consumer resilience, but Americans won’t likely be quick to put recent financial hurdles behind them

Anthony Waelter

Anthony Waelter

United States

Stephen Rogers

Stephen Rogers

United States

When Americans feel better about their finances, many would expect spending confidence to follow suit. But over the past year, financial well-being in the United States tells a story of resilience and recovery, while spending intentions tell one of calculation and caution.

For insight into these seemingly opposing trends, it’s helpful to look back on the roller-coaster ride of financial well-being sentiment in the United States—and what’s been shaping it—since the start of the pandemic.

Resilience and recovery

Surprisingly, financial well-being sentiment sustained an uptrend early on in the pandemic. In March 2021, Deloitte’s financial wellbeing index (FWBI) climbed to a three-year peak of 105.5 (figure 1). 

A confluence of factors was likely the reason behind the trend. By early 2021, some of the early pandemic shock had worn off, even though health concerns were still high. People were adjusting to lockdown measures. Vaccines were rolling out. And with limited spending avenues, consumers were padding their savings. Perhaps more importantly, historic government stimulus programs provided immense financial relief. In March 2021, the US personal savings rate spiked to 26.3 (roughly 4x prepandemic rates) and the US government announced the US$1.9 trillion American Rescue Plan that extended and built upon the Coronavirus Aid, Relief, and Economic Security (CARES) Act from the prior year.1

Deloitte financial wellbeing index

Deloitte’s financial wellbeing index (FWBI) captures changes in how consumers are feeling about their present-day financial health and future financial security. Unlike consumer confidence indices, which often focus on consumer opinions about economic conditions (i.e., health of the economy or labor market), financial well-being focuses on the consumer’s own financial experience, where they’re the experts.

Financial well-being is measured across six dimensions of financial health:

  • Confidence in the ability to meet current financial obligations
  • Comfort with the level of savings
  • Income relative to spending
  • Delays in making large purchases
  • Assessment of current financial situation relative to the prior year
  • Expectations of financial situation for the year ahead

Higher index values indicate stronger financial well-being.

Deloitte’s FWBI is part of a broader longitudinal study of consumer behavior, enabling financial well-being data to be linked to other behavioral data such as future spending intentions, as well as retail, leisure travel, and automotive purchase behaviors.

Financial well-being, however, quickly changed course. The pandemic persisted. Stimulus programs began to sunset. Inflation started rising.

By June 2022, FWBI values plummeted to a three-year low of 77.4. That month, inflation hit a peak of 9.1%, while the personal savings rate hit a historic low of 2.7%.

But despite prolonged financial stress, financial well-being sentiment has made a strong recovery over the past year. Since hitting its low in June 2022, FWBI values have returned to 2020 levels. Leading consumer confidence indices reveal similar recovery trends (figure 2).

In the month that the FWBI flipped to positive, several key economic indicators did too (figure 3), suggesting multiple drivers are behind the current recovery:

  • Inflation’s influence: The impact of spiking prices on consumers’ sense of financial well-being can’t be understated. When overlayed, FWBI and US inflation rates form virtually mirror images of each other (figure 3).
  • Earnings play catch-up: As price pressures began to ease, consumers’ purchasing power also started to recover (figure 3). Since June 2022, real weekly earnings (or inflation-adjusted) have gone up 1.1%. The recent upswing in real earnings starkly contrasts the steep drop since early 2021 (due to high inflation).
  • Repadding savings: With price pressures showing more stability amid a recovery in earnings, consumers have been able to save more (figure 3). While still below prepandemic levels, the US personal savings rate has nearly doubled since last June.

While the FWBI has recovered to 2020 levels, it doesn’t necessarily mean consumers feel they’re back in the exact same place financially. Consumers’ perspectives about their finances likely changed a bit too. Historic inflation and pandemics don’t come around all too often. When people experience new, prolonged hardship, the return of some better fortune, even if only slight, can go a long way.

Calculation and caution

Spending intentions provide some evidence that Americans have yet to undergo a complete financial reset.

Even though financial well-being sentiment has recovered somewhat, spending intentions aren’t following suit. In fact, over the past year, spending intentions (measured as the amount consumers estimate spending in the month ahead) have slipped as financial well-being has improved (figure 4). Other consumer spending data, including personal consumption expenditure (PCE) from the Bureau of Economic Analysis also point to weakened spending confidence (figure 5).

While the trend seems counterintuitive, there are likely a few reasons why spending intentions have decoupled from financial well-being:

  • A refocus on savings: Consumers saved at historic rates during the early part of the pandemic. But after months of leaning on savings, many are likely eager to see that extra zero on their bank statements again. As financial well-being recovers, consumers are taking the opportunity to refocus on saving—likely at the expense of spending more. In recent months, savings intentions grew at a higher rate than spending intentions (figure 6). The gap, however, is narrowing.
  • Calculated consumers: A year of unrelenting sticker shock is likely to have some long-term effects on spending behavior. Spending confidence shows signs of healing, just not everywhere, and not at once. For example, spending intentions are up year over year for leisure travel (figure 6). And the trend makes good sense. After two years on the travel sidelines, many are eager to reconnect with lost vacations.2
  • Passive protest: While inflation has eased, prices remain high relative to a year ago. Weakened spending intentions may be a form of protest to higher prices, particularly considering more than half of consumers believe companies are using this moment of high inflation to price gouge.3

Improvements in Americans’ financial health are always a welcome trend. But it’s particularly critical now as strong headwinds to economic growth emerge on the horizon and a potential recession looms. Consumer spending accounts for more than two-thirds of US GDP.4 With Deloitte’s US Economic Forecast still showing the economy slowing down substantially in the second half of 2023 and economic risks such as high borrowing costs already leading to banking strains and weighing on economic growth, any dip in consumer spending may just be enough to tip the economy in the wrong direction.5

  1. US Bureau of Economic Analysis.

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  2. Peter Caputo, Matt Soderberg, Eileen Crowley, Michael Daher, Maggie Rauch, Bryan Terry, and Upasana Naik, The experience economy endures: 2023 Deloitte summer travel survey, Deloitte Insights, May 22, 2023.

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  3. Stephen Rogers, Justin Cook, and Leon Pieters, When rising prices break consumers’ trust, Deloitte Insights, May 20, 2022.

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  4. US Bureau of Economic Analysis.

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  5. Daniel Bachman, United States Economic Forecast, Deloitte Insights, June 15, 2023.

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The authors would like to thank Jim Eckenrode and Marcello Gasdia for his contributions to the article.

Cover image by: Natalie Pfaff


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Stephen Rogers

Stephen Rogers

Managing Director


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