Apple Watch SE Not Displaying Contact Names...only numbers

After the recent update (7.2), contact names have not been showing on my Apple Watch SE. I have tried restarting each device and resetting the sync data. Still, contact names do not show when receiving messages or phone calls on the watch.

The Phone app on the Watch SE show "No Contacts" under the Contacts tab. Under the Recent and Favorites tabs, phone numbers are displayed, but no contact names. Contact names are appearing correctly on my iPhone 11 Pro. Is anyone else having similar issues? Is this maybe related to the newest update? Someone help!