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- Consumers and the Economic Outlook – US – Summer 2023
“The economic sentiment for most of last year was that the US was headed towards a downturn, as inflation ran rampant in tandem with quickly rising interest rates. Over a year from when prices peaked at a more than 40-year high, however, the US economy has continued to defy the odds. GDP growth remains healthy, unemployment is at historically low levels, and most importantly, inflation is at its lowest level in over two years – edging closer back to the 2% target rate with each passing month. As a result, consumer sentiment is on the upswing, and with further expectations of inflation continuing to cool, alongside a gritty labor market, the US is poised to avoid a downturn as it navigates the second half of the year.”
– Amr Hamdi, Senior Finance Analyst
This Report looks at the following areas
- Change in consumer finances within the past year
- Consumers’ outlook on their finances
- Consumers’ past spending behaviors
- Consumers’ future spending expectations
Collapse All
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Overview
- What you need to know
- This Report looks at the following areas
- Market context
- What you need to know
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Executive Summary
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- Top Takeaways
- Consumer trends
- Households remain largely optimistic for their future finances
- Figure 1: Opinions on financial future, 2023
- Figure 2: Consumers’ one-year ahead expected inflation rate, 2021-23
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- Figure 3: Inflation and wage growth over time, 2021-2023
- Lower net-worth consumers saw their financial situations improve the most
- Figure 4: Change in financial situation in the past 12 months, by household investable assets, 2023
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- Figure 5: Discover paid Facebook ad, 2023
- Affluent consumers’ travel appetite is significantly high
- Figure 6: Summer spending expectations, by household investable assets, 2023
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- Figure 7: Interest in premium credit cards, by household investable assets, 2023
- Economic predictions
- Opportunities and Challenges
- Housing market outlook remains gloomy throughout this year, but 2024 should be more favourable to interested homebuyers
- Figure 8: 30-year fixed mortgage rate, monthly, 2009-23
- Figure 9: Home purchase timeline, 2022
- Student loan repayment could lead to gloomier outlooks among younger generations, but FIs have the opportunity to ensure the financial wellness of these segments
- Figure 10: Changes consumers would make in their budgets, by generation, 2023
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- Figure 11: SoFi paid Facebook ad, 2023
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State of the Economy
- Economic overview
- Figure 12: Key economic indicators, 2023
- Real GDP increased at an annualized rate of 2% in Q1 2023
- Figure 13: Real GDP change from previous period, Q1 2007-Q1 2023
- Figure 14: Personal savings rate and real PCE, 2022-23
- Consumer confidence rebounded to 64.4 after six-month low in May
- Figure 15: Consumer sentiment index, 2007-23
- Price pressures continue to ease, with the CPI dipping to its lowest level in over two years
- Figure 16: Consumer price index change from year ago, 2022-23
- Solid jobs growth continues to underscore a gritty labor market
- Figure 17: Unemployment and underemployment, 2020-23
- Economic overview
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Consumers and the Economic Outlook – Fast Facts
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Consumers’ Financial Outlook
- Consumers’ positive outlooks are spread across various net worth brackets
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- Figure 18: Opinions on financial future, by household investable assets, 2023
- Consumers’ positive outlooks are spread across various net worth brackets
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Change in Financial Situation
- Consumers’ financial situations have been mostly unchanged since winter
- Figure 19: Change in financial situation in the past 12 months, 2023
- Unemployed consumers not seeking work believe themselves to be better off compared to last November
- Figure 20: Change in financial situation in the past 12 months, by employment status, 2023
- Consumers’ financial situations have been mostly unchanged since winter
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Spending Behaviors
- Consumers opted to continue cutting back on spending and adding to their savings between February and April
- Figure 21: Past spending behaviors, 2022 and 2023
- Consumers’ proclivity towards saving remains an enticing opportunity for high-yield product acquisition
- Figure 22: Future savings expectations, by generation, 2023
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- Figure 23: Synchrony paid Facebook ad, 2023
- Figure 24: American Express mobile display ad, 2023
- Three in ten consumers expect to spend money on their homes during summer
- Figure 25: Future spending on home improvements, by household investable assets, 2023
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- Figure 26: SoFi home improvement loan, 2023
- Figure 27: Advia credit union paid Facebook ad, 2023
- Consumers opted to continue cutting back on spending and adding to their savings between February and April
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Changes Consumers Would Make in Their Budgets
- Tapering back spending on dining out and clothes remain the top ways consumers plan on stretching their dollars further
- Figure 27: Changes consumers would make in their budgets, 2023
- The types of financial compromises households are willing to make remains tied to their current situations
- Figure 28: Changes consumers would make in their budgets, by financial situation, 2023
- Gen Zers and Millennials are the most open to buying more on credit
- Figure 29: Willingness to use more credit, by generation, 2023
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- Figure 30: Klarna mobile display ad, 2023
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- Figure 31: My Chase Plan intro offer, 2023
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- Figure 32: Chase BNPL blog, 2023
- Tapering back spending on dining out and clothes remain the top ways consumers plan on stretching their dollars further
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Appendix – Data Sources and Abbreviations
- Data sources
- Consumer survey data
- Marketing creative
- Abbreviations and terms
- Abbreviations
- Data sources
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