8/17/2023 0 Comments Inflation are reasons optimism.Gen Z (73%) and Millennials (69%) are most optimistic about their finances, especially compared to Gen X (51%) and Baby Boomers (41%). Part of the reason concern levels are not high: consumers’ optimism about their household finances in the next 12 months is high. Optimism Highest Among Younger Generations Yet, the declines we have observed are not concerning, and levels indicate the consumer credit market remains on solid footing,” added Wise. “The CII has been weighed down recently by cooling credit demand and a drop in supply by lenders. However, the fluctuations in the metric are low, especially compared to larger swings observed during recent crises, such as the onset of the pandemic when the CII dropped from 113 in Q1 2020 to 55 in Q2 2020. Lower levels for the CII generally indicate a decline in the overall health of the consumer credit market. The CII is a quarterly measure of depersonalized and aggregated consumer credit health trends that summarizes movements in credit demand, credit supply, consumer credit behaviors, and credit performance metrics over time into a single indicator. The CII decreased to 110 in Q1 2023, down from 113 the previous quarter and 116 one year earlier, though the overall level indicates that credit markets remain relatively healthy. As long as the employment situation remains stable, most employed individuals have the resources to weather inflation and higher interest rates – at least in the near-term.”Ĭonsumer Credit Health Down, But Not WorrisomeĪs consumers send mixed messages about the economy, TransUnion’s proprietary gauge on consumer credit health trends – the Credit Industry Indicator (CII) – posits a slight decline occurring in the credit markets. 1 reason: the unemployment rate remains near record low levels. Conversely, a majority of Americans are optimistic about their financial future. It’s also likely why a number of people are expressing that they feel they are in a personal recession or soon will be in one, with costs rising faster than their incomes. “The combination of rising interest rates and elevated inflation, while not uncommon from a historical perspective, is an unfamiliar experience for many consumers, especially those in the Gen Z and Millennial generations. “We are living in uncharted territory from a consumer credit perspective,” said Charlie Wise, senior vice president and head of global research and consulting at TransUnion. Greatest Financial Concern by Generation (Percent Ranked as Top 3 Concern) Top Concerns Recession (53%) and increased housing prices on rent or mortgage (45%) were the next highest concerns.Īnd while the Federal Reserve has increased interest rates 10 times since March 2022, rising interest rates (41%) only ranked as the fourth greatest financial concern for consumers, though that percentage did rise from 39% in Q1 2023 and 34% one year earlier in Q2 2022. For the sixth consecutive quarter, consumers indicated that inflation is causing them the most anxiety, with 79% reporting it as one of their top three financial concerns. The Q2 2023 Consumer Pulse study is based on a survey of 3,000 American adults between April 25-May 9, 2023. That’s understandable when one considers that inflation rose to 40-year high levels in mid-2022 and, despite a gradual decline over the past year, remains elevated at twice the rate it was prior to the pandemic. About half (46%) of consumers reported their income is not keeping up with inflation for everyday goods such as groceries, gas, etc. What’s driving these conflicting notions? Inflation. Despite these concerns, about six in 10 Americans (57%) reported optimism about their household finances for the next 12 months – the highest level since the last quarter of 2021. Three in four consumers (75%) believe a recession will occur by the end of 2023. economy is in a recession or will be by the end of June. The latest TransUnion (NYSE: TRU) Consumer Pulse study found that 44% of Americans believe the U.S. CHICAGO, J(GLOBE NEWSWIRE) - Many consumers are in a financial conundrum.
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