Optimism Remains High Even as Inflation Concerns Grow and Vaccines Play Role in “Great Resignation"
Latest TransUnion Consumer Pulse study explores consumer sentiment changes in 2021
Even as inflation concerns rise and vaccines impact some jobs, nearly two in three consumers, particularly those from the youngest generations, are exhibiting optimism about their finances. The newest TransUnion (NYSE: TRU) Consumer Pulse study found that 63% of U.S. respondents said they are optimistic about their household finances in the next 12 months. Millennials (73%) and Gen Z (71%) were the most optimistic out of all generations surveyed.
The Consumer Pulse study includes a survey of 2,899 U.S. consumers conducted Oct. 28-Nov. 2, 2021. While consumer optimism is high, 59% of Americans report being extremely or very concerned about inflation. The oldest generations – Baby Boomers and Gen X – showed the greatest unease about inflation with 66% stating they were extremely or very concerned, compared to only 37% of Gen Z.
“It’s encouraging to see a majority of consumers optimistic about their finances. It’s even more encouraging that the youngest generations are proving to be the most optimistic,” said Charlie Wise, head of global research and consulting at TransUnion. “While challenges certainly still exist, it’s clear that more people are in better financial shape today than they were at the beginning of the year.”
As prices for many everyday items have risen in 2021, the percentage of Americans reporting current household income negatively impacted by the pandemic has now dropped to 34% in Q4 2021 from 38% in Q1 2021. In this same timeframe, fewer consumers are reporting an inability to pay bills – 30% vs. 34%.
Vaccines impacting both optimism and “Great Resignation”
While the Consumer Pulse study was administered just days before the federal government approved a COVID-19 vaccine for 5-11 year-olds, 61% of respondents said they would vaccinate their children. Those parents who stated they would vaccinate their children also were more optimistic about their finances – 53% vs. 35% for non-vaccinating parents.
Vaccines also appear to be playing a role in the so-called “Great Resignation.” More than 32% of Americans, excluding retirements and business closures, report either leaving or being let go from their job in the past three months. Among that group, nearly half cite COVID-19 safety concerns (28%) and vaccine mandates (20%) as primary reasons for their job change.
Interestingly, 75% of those citing COVID-19 as a reason for job changes are more optimistic about their future household finances compared to 63% for the overall population.
Consumers taking a cautious approach to spending
Despite greater overall confidence, Americans are being cautious about household spending. Over the next three months, consumers expect to ease spending on discretionary items and large purchases while increasing spending on bills and loans, and medical care.
At the same time, 33% of consumers plan to apply for new credit or refinance in the next year. Millennials and Gen Z will be the most credit active across generations with 51% and 45%, respectively saying they plan to apply for new credit or refinance in the next year.
“As we near the end of 2021, many consumers appear to be in an improved financial position and are exhibiting traits that will help them better achieve their economic goals,” said Margaret Poe, head of consumer credit education at TransUnion. “Healthy habits such as paying down debt are critical, especially for younger consumers who are working on improving their financial picture.”
A good foundation for healthy credit is to consistently read one’s credit report. Individuals interested in learning how to read their credit report can click here. The complete Consumer Pulse study can be viewed here.
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