The Three Blind Spots in How Consumer Sentiment Is Measured

• Traditional sentiment measures miss that cumulative price increases since 2020 have permanently damaged household budgets, even as inflation 'cools'—prices remain 25% higher while wages recovered slowly
• Income alone no longer predicts spending behavior: 61% of Americans lived paycheck to paycheck in one study, rising to 68% by another measure, with financial structure and liquidity determining actual spending capacity
• The February 2026 PCEI reading of 51.5 masks a 10-point spread between paycheck-to-paycheck consumers and others, while job security scores 83.5 but confidence in finding equivalent replacement work sits at just 48.0

Summary: PYMNTS Launches New Consumer Sentiment Index to Address Economic Measurement Gaps

Key Development:

PYMNTS Intelligence will launch the PYMNTS Consumer Expectations Index (PCEI) on March 2, 2026, a monthly survey of 2,000+ consumers designed to capture economic sentiment more accurately than traditional measures like the University of Michigan Index.

Three Critical Measurement Blind Spots Identified:

1. Permanent Inflation Damage: Traditional surveys miss cumulative price impacts. While inflation has "cooled," prices remain 25%+ higher than 2019 levels for groceries and essentials, creating lasting financial strain that CPI data doesn't capture.

1. Income as Poor Predictor: By August 2025, 68% of Americans lived paycheck-to-paycheck (up from 61% in earlier readings). Two individuals with identical incomes make vastly different spending decisions based on debt load, savings, and fixed costs—traditional models miss this.

1. Employment vs. Job Security Gap: Low unemployment rates don't reflect worker anxiety. While personal job security scores 83.5, confidence in finding equivalent replacement work scores just 48.0—a critical distinction affecting spending behavior.

February 2026 PCEI Results:

• Headline reading: 51.5 (slightly above neutral 50)
• 10+ point spread between paycheck-to-paycheck consumers and others
• Debt confidence: 71.4 (strongest metric)
• Current financial conditions: 51.5 (barely positive)
• Millennials most optimistic at 60.7; Boomers/Seniors at 53.5

Track Record:

PYMNTS Intelligence consumer surveys accurately predicted pandemic duration, inflation persistence, and tax refund spending patterns when official forecasts proved wrong, demonstrating consumers understand their financial constraints better than aggregate models suggest.

Market Implication: The index reveals consumers are "holding on" through careful debt management rather than genuine economic resilience—a critical distinction for retailers and investors assessing discretionary spending potential.