Equifax released its first quarter 2026 Market Pulse Index on July 8, 2026, revealing a decline in U.S. consumer financial health as the index dipped from 61.6 to 60.9. This marks the second straight quarter of decline, with drops observed across all generations. The report highlights a K-shaped economy where the middle class is contracting, as consumers migrate toward the extremes of financial stability rather than maintaining a middle ground.

The Market Pulse Index categorizes consumers into three segments: Thrivers (top 10% with an index above 80), the Pivoting Middle (index between 50 and 79), and Strivers (bottom 20% with an index below 49). In the first quarter of 2026, the Thrivers group experienced a 5% drop in total size, while the Strivers group saw a 2% increase. The Pivoting Middle tier saw a 0% change in total size.

Class Migration Drivers

A review of data from the third quarter of 2024 to the first quarter of 2026 indicates that asset levels are the primary driver of movement between classes. A significant portion of individuals leaving the middle class are moving into the Strivers category, with 97% of that movement explained by holding under $100,000 in assets. Conversely, more than two-thirds of those successfully climbing from the Middle to the Thrivers tier belong to the Affluent segment, defined as having over $1 million in assets.

"As the U.S. continues to navigate a K-shaped economy, where different segments of the population experience divergent financial realities simultaneously, we see that reaching the top financial tier creates powerful momentum, much like compounding interest," said Emmaline Aliff, Advisory Leader at Equifax. "But for those who haven't reached the top financial tier, recent inflation and debt concentration are applying severe downward pressure. This pressure is contracting the size of the middle class."

Generational Downturns

For the second consecutive quarter, index values saw a downward trend across all age segments. Millennials dropped to an average index of 58.1, a 1.2% decrease quarter-over-quarter, and lead all generations in significant index decreases at 12.98%. They also represent the largest portion of Strivers at 7.59%, driven primarily by a lack of assets.

Generation Z dipped slightly to an average index of 58.9, exhibiting significant variability with an 11.73% segment showing upward index movement tied to proximity to family or neighborhood wealth safety nets. Generation X decreased to an average index of 60.3 as they continue to balance peak career debt against the rising costs of essential needs. With an average index of 64.3, Boomers+ remain the most financially stable segment, with 58% to 69% of the Boomer population remaining completely steady within their index range.

Companies offering Affordable Care Act (ACA) marketplace health plans are seeking a median 14% premium increase for 2027, according to an analysis released Wednesday by the Peterson-KFF Health System Tracker. If approved by state regulators, the rate hikes would mark the second-highest annual premium increase since 2018, significantly impacting affordability for millions of Americans.

Rising Medical Costs Push Premiums Higher

According to Peterson-KFF, rising healthcare costs remain the biggest driver of the proposed rate increases. Insurers cited higher spending on medical care, increased demand for specialty medications and GLP-1 weight-loss drugs, as well as broader medical inflation. The analysis also found that insurers expect the pool of enrollees to become older and sicker after the expiration of enhanced federal premium subsidies introduced during the COVID-19 pandemic. As healthier consumers drop coverage, insurers estimate that shift alone will add about 4 percentage points to next year's premium increases.

Some insurers also said recent Trump administration policy changes that tighten enrollment requirements are contributing to higher requested rates. In its New York filing, UnitedHealth Group Inc. said the combination of expiring enhanced subsidies and the new enrollment rules accounted for 12.7% of its proposed rate increase.

Affordability Pressures Continue

The Department of Health and Human Services estimates 19.2 million Americans are currently enrolled in ACA marketplace plans, down about 13% from 22.1 million in 2025 after the enhanced subsidies expired. Without those additional subsidies, average premiums rose 58% in 2026, while deductibles increased by roughly $1,000 per person, making coverage less affordable for many consumers. If the latest filings are approved, ACA premiums will have risen by more than 33% between 2025 and 2027.

Most marketplace enrollees earning less than 400% of the federal poverty level continue to qualify for premium subsidies, helping shield them from much of the increase. Those with incomes above that threshold, however, are likely to bear the full impact of higher premiums.

Marketplace Faces Policy Changes

The proposed rate requests build on earlier warnings that higher healthcare costs would continue to pressure the ACA marketplace. In May, KFF projected marketplace enrollment would decline after enhanced federal subsidies expired, warning that rising premiums would push more consumers to drop coverage while increasing financial pressure on insurers.

The filings also come as the Trump administration tightens oversight of the Affordable Care Act marketplace. Earlier this week, Health and Human Services Secretary Robert F. Kennedy Jr. and Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz said more than 1 million HealthCare.gov enrollees do not have a Social Security number on file as part of a broader review of suspected fraud and enrollment verification. Administration officials have also said nearly 2.9 million improper or questionable enrollments have already been removed or blocked.

Insurers, including Centene Corporation and UnitedHealth Group Inc., have also warned investors about elevated medical costs in their Affordable Care Act businesses this year. CVS Health Corporation said last year that its Aetna unit would stop offering Obamacare plans in 2026 because of rising costs.