The American Customer Satisfaction Index (ACSI): Quarter 3, 2025

A Threat Potentially More Damaging Than the Great Recession: The Decoupling of Seller Profits from Buyer Utility

In addition to the government shutdown, economic data blackouts, and volatile tariff rate changes, there is another, yet mostly unnoticed, threat to the very functioning of U.S. economy: high profits, record-breaking stock returns, and weakening customer satisfaction.

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ACSI 1994-2025

The American Customer Satisfaction Index (ACSI^®) Q3 results are a warning sign. While the national score is unchanged at 76.9 (on a scale of 0 to 100), it follows a steep decline and long-term stagnation that is a slow-moving threat which, if not reversed, might inflict severe damage to economic growth: the decoupling of buyer utility from seller profit.

Consumer switching costs have risen over the past decade, especially in digital and service sectors, with less competition as a result. Online retail, video streaming, and search engines have decreasing customer satisfaction this quarter. Overall, markets have become more concentrated with rising seller pricing power. Corporate profits as a share of national income have increased as well, but so have customer complaints. Mergers and acquisitions have escalated, while antitrust enforcement has not. Consumer surplus is eroding, with less household purchasing power as a result.

If economic history is a guide, innovation will suffer, capital allocation will be inefficient, and productivity growth will slow. There will be rising inequality and further redistribution of income from consumers to shareholders. Because high-income groups have lower marginal propensity to consume, consumer demand will fall and both groups will be worse off.

The stock returns of the ACSI companies with the highest scores in their respective markets point in the same direction. Not long ago, these companies produced significantly higher returns relative to the S&P 500. Over the long term, from 2006 to the end of September 2025, that is still true, but recently there has been a dramatic change. The asset-weighted S&P 500 has become extremely top-heavy, with fewer than 2% of the companies sometimes accounting for more than 50% of its return. The equal-weight S&P counterpart, which used to outperform the asset-weighted one, now has returns slightly below the top ACSI companies, while both have returns below the S&P 500.

“There is no question as to the remedy: Sellers should compete for buyers,” said Claes Fornell, Distinguished Donald C. Cook Professor (Emeritus) of Business Administration at the University of Michigan. “While the notion of the perfect competitive market equilibrium, where buyers maximize utility and sellers maximize profit, is an idealistic unobtainable reality, its opposite is a tangible threat: When sellers make profit because buyers have limited choice, the economy suffers. Sellers are supposed to strengthen buyer relationships by providing buyer satisfaction superior to that of their competition. If they do, they would be rewarded. If they don’t, consumer and equity markets render punishment. That is how a market economy is supposed to work, but that is not what we have today.”

There are exceptions, however, and they may be worth mentioning: Apple, Google, Microsoft, and Costco are longtime front-runners in customer satisfaction. Most of them belong to the high stock-return technology sector and have pricing power, but they have not exercised that power to the detriment of their customers. Accordingly, even their short-term three- and five-year stock returns are higher than the S&P 500 return.

A healthy market economy relies on constructive competition among sellers for the satisfaction of buyers, with prices aligned with costs and demand rather than monopoly power. Increasing customer satisfaction implies that consumers realize value, with rising surplus and high marginal utility of expenditure as a result. Most data suggests that we now have the opposite. The reason that it might be more damaging than the Great Recession of 2007-2009 is that it threatens the very functioning of a market economy, which was not the case back then.

Claes Fornell is the Donald C. Cook Distinguished Professor of Business Administration (Emeritus) at the Ross School of Business, University of Michigan.

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No advertising or other promotional use can be made of the data and information in this release without the express prior written consent of ACSI LLC.

About the ACSI

The American Customer Satisfaction Index (ACSI®) is a national economic indicator and a leading provider of customer analytics products that help organizations build lasting customer relationships and prove ROI on experience investments. ACSI’s AI-enhanced platform delivers intuitive dashboards and cause-and-effect analytics that pinpoint the quality drivers most predictive of customer allegiance, retention, price tolerance, and financial performance. ACSI data has been shown to correlate strongly with key micro and macroeconomic indicators, including consumer spending, GDP growth, earnings, and stock returns.

Founded in 1994 at the University of Michigan’s Ross School of Business, the ACSI measures customer satisfaction with more than 400 companies in over 40 industries, including federal government services, based on approximately 200,000 annual interviews. Learn more at https://www.theacsi.org.

ACSI and its logo are Registered Marks of American Customer Satisfaction Index LLC.

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