Two years removed from the country’s worst bout of inflation in over four decades, the US economy has defied expectations. Prices continue to exhibit signs of being on a deflationary path, the labor market remains resilient, wage growth is solid, along with real GDP continuing to display healthy quarterly increases.
Income growth opportunities have especially driven much of the positive gains in households’ personal finances, as well as their bullish outlooks; nearly half of those financially better off in the past year have reported receiving a pay increase within the same time frame. Similarly, 45% of those that predict they will be a lot better off have also seen a bump in salary.
Strong consumer confidence has historically exhibited strong links to robust consumer spending – as seen by the 44% of households with expectations of travel during the summer, with home improvements and big-ticket purchases being other discretionary outlets many consumers plan to engage with in the near-term.
This report looks at the following areas:
- Change in consumers’ finances within the past year
- Consumers’ outlook on their personal finances
- Consumers’ past spending behaviors
- Consumers’ future spending expectations
A resilient US economy remains driven by consumer spend, robust employment growth and cooling inflation – leading to sustained optimism among households.
Amr Hamdi, Senior Analyst – Financial Services
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Executive Summary
- What you need to know
- Consumer trends: key takeaways
- Nearly 40% of consumers have seen their financial situations change for the better in the past year
- Graph 1: change in financial situation over the past 12 months, 2024
- Households’ growth in finances has primarily been driven by salary gains
- Graph 2: income growth over the past 12 months, by change in financial situation, 2024
- The election cycle is driving significantly higher degrees of political concern among older generations
- Graph 3: concerns over domestic politics and international affairs, by generation and employment status, 2024
- Older consumers’ concerns are mainly rooted in potential changes to tax policies and regulations
- Graph 4: concerns over tax policies/regulations after the election, by generation and employment status, 2024
- Travel remains one of the most appealing outlets for consumer spending during the summer
- Graph 5: planned financial behaviors over the next three months, by household income, 2024
- Retention and acquisition opportunities are a bright spot for FIs throughout the rest of 2024
- Opportunities
- Brands have the opportunity to educate customers, especially retirees, on the potential impacts of the election on their portfolios
- With younger consumers exhibiting a potential over-reliance on credit, FIs must play a pivotal role in guiding safe use of these products
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Consumer Insights
- Consumer fast facts
- Consumers’ financial outlook
- Households’ outlooks on their personal finances remains bullish
- Graph 6: income growth in the past 12 months, by financial outlook, 2024
- Graph 7: opinions on financial future, 2024
- For over a year, many households have seen their purchasing power grow due to wage growth outpacing the rise in prices
- Graph 8: wage growth and headline CPI, 2023-24
- Consumer optimism is stretched across diverse income brackets
- Graph 9: opinions on financial future, by household income, 2024
- Low-income households holding mild outlooks on their financial situations also indicates a strong degree of pessimism
- Change in financial situation
- Consumers not seeking employment are, as expected, the least likely to feel financially worse off
- Graph 10: % of consumers that are financially worse off, by employment status, 2024
- Married consumers are significantly more likely to be financially better off
- Graph 11: % of consumers that are financially better off, by marital status, 2024
- The percentage of younger consumers that are financially worse off has declined dramatically since the end of the last year
- Graph 12: % of consumers that are financially worse off, by generation, 2024
- Economic concerns
- Inflation remains consumers’ top ranking economic concern
- Graph 13: top economic concerns ranked, 2024
- Inflationary concerns are naturally more concentrated among households in tighter financial situations
- Graph 14: % of consumers that ranked inflation as their top concern, by financial situation, 2024
- Four in 10 renters are concerned about the housing market
- Graph 15: concerns over the housing market, by housing situation and area, 2024
- Year-over-year rent prices have cooled dramatically over the past two years
- Graph 16: Zillow Observed Rent Index, 2022-24
- Improvements across housing remain contingent on two key factors
- Financial behaviors
- Travel, home improvement and big-ticket purchases are where consumers have put a large share of their money in the past year
- Graph 17: financial behaviors over the past year, 2024
- Consumers’ savings intentions are decreasing in favor of greater discretionary spending
- Graph 18: % of consumers planning to add to their savings, by age, 2024
- In addition to the favorable rates, brands showcased a lack of account fees, FDIC insurance and unlimited account transfers
- FIs have an have active prime and super prime segment to direct home improvement messaging towards
- Graph 19: planned financial behaviors over the next three months, by household investable assets, 2024
- Changes to consumers’ budgets
- Consumers have been less willing to cut back spending on non-essentials since last December
- Graph 20: changes consumers have made to their budgets in the past six months, 2024
- Financially struggling consumers will naturally pursue cost-effective solutions
- Graph 21: changes consumers would make if forced to restrict their budgets, by financial situation, 2024
- Lower-earners are forced to compromise the most when budgeting
- Graph 22: changes consumers have made to their budgets in the past six months, by financial situation, 2024
- Gen Zers are increasingly more open to leaning on credit products
- Graph 23: % of consumers that would buy more on credit if forced to restrict their budgets, by generation, 2024
- While some consumers can financially support higher credit usage, others are not able to do the same without overextending themselves
- Graph 24: attitudes toward credit card debt, by generation, 2024
- State of the economy
- Market context
- US economic overview
- The US expanded by 1.4% in Q1 2024
- Graph 25: quarterly real GDP growth, 2020-24
- Annual inflation sits at 3% as of June, the lowest it has been in over three years
- Graph 26: headline CPI and shelter CPI, 2021-24
- Consumer sentiment remains down, but is expected to rebound soon
- Graph 27: consumer sentiment index, 2022-24
- The unemployment rate slightly edged up, but job growth remains solid
- Graph 28: unemployment rate, 2019-24
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Appendix
- Consumer research questions
- Consumer research methodology
- Generations
- Abbreviations and terms
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