The Market Pulse Index: Unpacking Consumer Financial Health and Generational Divides in the First Half of 2025

Highlights: 

• The Market Pulse Index shows a slight decline in overall U.S. consumer financial health, but this stress is unevenly distributed across generations and credit tiers.

• Younger consumers, particularly Gen Z with student loans, face the most significant financial pressure, leading to a widening financial gap between generations.

• Businesses need to adopt nuanced and segmented strategies, including personalized campaigns, flexible repayment plans, and proactive financial education, to address the divergent experiences of different consumer groups in a K-shaped economy.

In today’s fast-moving market, data-driven information and market understanding are key to being an agile and resilient organization. To help businesses navigate this complex environment, Equifax has introduced the Market Pulse Index. 

The Market Pulse Index provides a comprehensive look at U.S. consumer finances, illustrating how various financial factors interact, change over time, and adapt to evolving economic conditions. For businesses, understanding these dynamics at a population or segment level is crucial for strategic planning and informed decision-making.

The Index, which measures U.S. consumer financial health on a scale of 1 to 100, with 100 representing the greatest financial strength, offers a powerful, aggregated view designed to offer a full-spectrum view into consumer finances and highlight how key financial components interact and evolve over time. 

For the first half of 2025, the Market Pulse Index measured 61.4 when averaged across the entire US consumer population.  That’s a 1.1% decrease since June 2021, which is the earliest period tracked by the Market Pulse Index. 

This slight decline signals potential rising financial pressure on the average U.S. consumer over the last four years. However, a closer look at the data—synthesized using AI/ML methods across five crucial financial dimensions—reveals that the stress is not evenly distributed.

The New Financial Barometer: Understanding the Market Pulse Index’s Five Pillars

The Market Pulse Index is built on a proprietary, holistic framework that captures the combined effects of multiple economic forces. It distills consumer financial stability by measuring the interplay of:

• Credit: The ability to obtain and manage credit based on historic credit usage and performance

• Debt: The amount of debt held in relation to the ability to pay that debt

• Income: Personal income from employment and other sources such as interest, investments, gifts, etc

• Capacity: The ability to continue meeting spending and debt obligation needs during periods of financial stress

• Assets: The existence of savings and other wealth that can be used to meet discretionary and non-discretionary spending needs or debt obligations, if needed

This multidimensional approach ensures the Index serves as a true signal for clarity, reflecting the cumulative impact of both positive and negative financial factors.

The Index’s correlation with macroeconomic indicators confirms the need for this holistic view. 

Tracking back to 2021, the Market Pulse Index initially rose despite inflation as personal income was also increasing. This illustrated the typical lagging effect of inflation, where the negative impact on financial wellness is often delayed. As inflation persisted, however, the Market Pulse Index leveled off and then declined. 

This suggests the downturn was directly driven by negative factors starting to take hold, such as rising bank card balances and increased consumer spending on the same goods due to higher prices. While the rate of inflation has slowed, the Market Pulse Index has stabilized at a lower level, likely underscoring that high prices and their negative effects on consumer finances persist.

The Widening Generational and Debt Gap

The most profound insight from the Index is the widening financial gap between generations, providing an essential cautionary note for businesses targeting younger demographics.

Older cohorts, such as Baby Boomers and Traditionalists, have demonstrated the most financial resilience, maintaining consistently steady and higher index readings. This stability highlights the importance of resource accumulation in long-term financial strength.

In stark contrast, younger consumers face the most significant pressure. Gen Z is driving this trend, with their Market Pulse Index falling by over 5% between June 2021 and June 2025. Gen Z also saw the most significant year-over-year decrease from 2022 to 2023, with a 6.13% decline.

Millennials, while consistently having the lowest average Index number (59.18), also face persistent headwinds.

This generational disparity is severely compounded by student loan debt. The resumption of federal student loan payments has created a distinct and growing chasm in financial health between borrowers and the general population. Critically, the data shows that student loan holders began struggling proportionally worse in mid-2023, before deferments officially ended in September 2023.

This indicates that underlying financial pressures, not just the resumption of payments, may be contributing to their decline. Unsurprisingly, Gen Z with student loans are facing the biggest challenges. This group experienced a significant drop of 6.6% between the start of 2022 and the end of 2023 alone, leading to a 4.8% drop from 2021 to 2025.

Businesses relying on Gen Z consumers for growth must recognize that this segment of the market is operating under a unique and extreme degree of financial strain, tempering with their ability to build wealth.

Credit Tiers and Holiday Caution: Nuance for Lenders and Retailers

The Market Pulse Index provides valuable nuance for financial institutions regarding credit usage and overall consumer stress.

The lowest and highest credit tiers have nearly returned to their 2021 levels, but how they’ve returned is different. All tiers increased in 2022. The lower tiers maintained the gains longer but are falling in 2025. The upper tier fell initially but has been moving upward since 2023.

In contrast, middle credit tiers (580-739) experienced a sharper decline, falling over 3% in 2023, followed by an approximate 1% recovery by 2025. This suggests that mid-tier consumers—those with established credit but potentially fewer assets or less income capacity—were hit especially hard in the downturn. This pattern reflects a K-shaped economic recovery, where different segments of the economy recover at vastly different rates.

Also, regarding credit card behavior, while consumers who pay off their balances monthly (transactors) generally have a higher average Index than those who carry a balance (revolvers), both populations have tracked similarly to overall population shifts. This is notable because transactors typically fare better than revolvers during inflationary periods.

Additionally, the report signals that consumers are approaching the upcoming holiday season with more caution and creativity than usual, given higher prices and debt burdens. Recent data shows a rising demand for credit, with personal loan originations up 17.6% and bankcard balances reaching $1.07 trillion in July 2025. This suggests more households, particularly middle-income and younger generations, may be relying on credit and flexible payment options to offset inflation and keep traditions alive.

Strategic Action in a K-Shaped Economy

The Market Pulse Index makes it clear:

Broad, one-size-fits-all business strategies are now insufficient. The growing gap between financially secure and financially vulnerable groups means institutions must adopt more nuanced and segmented approaches.

For lenders and retailers, the data demands targeted strategies that acknowledge the divergent experiences of specific consumer groups:

• Personalized Campaigns: Design marketing and credit offers based specifically on age, income, and debt profiles, recognizing the distinct vulnerability of Gen Z and middle-credit tiers.

• Flexible Repayment Plans: Proactively offer flexible repayment options and tailored financial products for borrowers under financial stress, especially those dealing with student loan debt.

• Proactive Financial Education: Target younger audiences with financial education resources that help them manage debt, build capacity, and navigate an uncertain job market.

The Market Pulse Index provides a powerful, comprehensive lens on the state of U.S. consumer finances. By moving beyond broad trends, businesses can dissect the specific challenges and recoveries experienced by distinct segments, ensuring their strategies are built for the complex reality of a K-shaped economy.

Keep Your Business Goals Within Sight

Need your business to run better and more efficiently? Reach out at riskadvisors@equifax.com.  

We hope you will join us for our October 2025 Market Pulse webinar taking place on Thursday, October 16, 2025, where our talented and dynamic panel will discuss their latest insights on overall consumer financial health and navigating uncertainty and consumer shifts as we head into the holiday shopping season. To ask questions in real time and gain deeper insights before anyone else, you must be there. Don’t miss it!

Interested in learning how personalized insights can drive your business forward? Sign up for a complimentary 60-minute Market Pulse Advisory with one of our experts. 

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