Consumers Face Worsening Financial Well-Being Following a Year of Inflation, Nagging Debt
Morning Consult’s biannual report, The State of Consumer Banking & Payments, tracks evolving trends in consumer banking, payments and investing, and evaluates what changing attitudes mean for the future of each industry. Download your copy today.
As banks navigate changing economic conditions, including rising interest rates, persistent inflation and repercussions from recent bank collapses, the public is feeling worse off financially compared to a year ago and younger consumers are being dragged down by debt, according to Morning Consult’s State of Consumer Banking and Payments report.
Consumers, Especially Higher Earners, Are Worse Off Now Than Last Year
Inflation finally hits home for high-income households
- According to the report, inflation and interest rate hikes have impacted the financial well-being of all households, regardless of income, but households making more than $100,000 a year saw the biggest drop in well-being compared to February 2022.
- Charlotte Principato, Morning Consult’s lead financial services analyst and the author of the report, said that high-income households “have started to feel the pain” of stubbornly high inflation. “We tend to see lower- and middle-income households impacted more quickly by inflation, since they have less financial cushion, while higher-income households may not exhibit any changes at all in their financial well-being during periods of inflation,” she added.
- Previous Morning Consult research found that households making more than $100,000 per year were also most likely to say that they have taken active steps to prepare for a recession or economic downturn (52%).
- Over the past year, Morning Consult data indicates that financial well-being has fallen across generational demographics, with one exception: Millennials’ well-being was up 0.56 points in February 2023 compared to February 2022.
Millennials Face a Mountain of Debt
Millennials, in their prime family-focused years, rely heavily on financing to make it all work
- The share of millennials who reported having credit card, auto, mortgage, educational, medical, personal, “buy now, pay later,” home equity and other types of debt was higher compared to any other generation, across all debt types examined.
- Principato noted that “younger generations are often thought of as being credit or debt-shy, but our data paints a very different picture,” adding that “being credit shy is a luxury that millennials and Gen Z simply can’t afford.” Millennials especially are in the midst of their prime home-purchasing and child-rearing years, she said, and still paying off cars and educational loans.
- Younger generations are also facing a heavier burden when it comes to student loans, with 33% of millennials and 21% of Gen Zers saying they have educational debt. Gen Xers weren’t far behind, however, with 16% saying they have student loans.
Roughly 1 in 5 consumers consider banking moves
Morning Consult’s biannual State of Consumer Banking and Payments report also found that while the public’s trust in banks remains high, many consumers are thinking of moving their money. In March, 23% of U.S. adults said that they are considering starting a relationship with a new bank in the next six months, up 8 percentage points from February.
Consumers also conveyed uneasiness about the banking industry as a whole: After the collapse of three banks in March, nearly 2 in 3 U.S. adults said they believed more banks would be put into receivership by the Federal Deposit Insurance Corp.
For more exclusive data on the financial well-being of consumers, download Morning Consult’s latest State of Consumer Banking and Payments report.
Morning Consult Research Intelligence data featured in this report draws from monthly surveys conducted from July 2021 to March 2023 among roughly 2,200 or 4,400 U.S. adults per month. It also includes data from various surveys fielded throughout 2022 and 2023 among representative samples of around 2,200 U.S. adults each.
Amanda Jacobson Snyder is a data reporter at Morning Consult covering finance. @AJacobsonSnyder