Majority of Americans Optimistic About Their Financial Future Despite Challenges Brought on by Inflation and Fears of a Recession
TransUnion’s Consumer Pulse study finds inflation is the greatest concern
More than half of Americans (55%) remain optimistic about their financial future even as inflation and fears of a recession weigh on their finances. The newly released TransUnion (NYSE: TRU) Consumer Pulse study from Q2 2022 found that optimism levels dropped from 59% the previous quarter and 64% at the end of 2021 largely due to an array of challenges.
The study found that inflation is the greatest worry for Americans – by a wide margin – with 63% of respondents ranking it as their top or second greatest concern. A recession (30%) and rising housing and rental costs (25%) followed.
The results from the May 12-19 survey of 2,739 adults found that concerns differed based on generation. Stock market volatility is a much greater concern to Baby Boomers compared to all other generations whereas Gen Z had an outsized concern about jobs. The study also found that the youngest generations were most positive about their financial future with 70% of Millennials and 66% of Gen Z being optimistic about their household finances in the next 12 months compared to just 39% of Baby Boomers.
Optimism Levels and Top Concerns By Generation
2nd Greatest Concern
3rd Greatest Concern
Stock Market Volatility
“It’s clear that Americans are facing many tests, whether it’s inflation, high housing and rental costs, rising interest rates or fears of a recession, but there’s also strong evidence that consumers are weathering this excess of challenges,” said Charlie Wise, senior vice president and head of global research at TransUnion. “The majority of consumers are still optimistic. Jobs are plentiful and many consumers have seen material increases in their income over the past year, particularly those in lower income tiers. This has helped consumer credit performance remain steady – all reasons for optimism.”
The study found that income appears strong with 81% of respondents reporting their income stayed the same or increased in the past three months; 90% expect the same in the coming year. More people reported starting a new job or a business than losing a job or quitting in the last three months. This is in line with May’s 3.6% unemployment rate from the U.S. Bureau of Labor Statistics.
Spending Patterns May Shift in the Near-Term
Despite the many positives in today’s consumer credit market, nearly all Americans (95%) reported being concerned about inflation, with 38% extremely concerned. This is up 11 percentage points from the first time this question was asked in Q3 2021.
About two-thirds (64%) of all Americans expect to change spending in the next three months because of inflation. Of those, 52% say they’ll cut discretionary spending such as dining out, travel and entertainment. Approximately 41% say they’ll cut spending on retail shopping and 40% on making large purchases.
Overall, 33% of Americans plan to apply for new credit or refinancing in the next 12 months, a 5-percentage point drop from Q1 2022. Millennials (56%) and Gen Z (46%) plan on being most active in the credit markets with Gen X (32%) and Baby Boomers (10%) lagging.
Of those who plan to apply for new or refinance existing credit within the next year, 32% say they’ll apply for a new home loan, an increase of four percentage points from Q1 2022. Millennials lead all generations at 40%.
“We are living through an unconventional period wherein consumers are facing more financial challenges than they have in at least a decade. Yet the job market is strong and most people are using the credit they have in a responsible manner,” said Margaret Poe, head of consumer credit education at TransUnion. “This also is a time when consumers should remain diligent about their credit and put into practice healthy habits such as making on-time payments and keeping credit utilization at 30% or less.”
The complete Consumer Pulse study can be viewed here. See TransUnion’s blog for tips about how to manage your credit if you're relying on credit cards more.
About TransUnion (NYSE: TRU)
TransUnion is a global information and insights company that makes trust possible in the modern economy. We do this by providing an actionable picture of each person so they can be reliably represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good®.
A leading presence in more than 30 countries across five continents, TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people.