Canadian wildfire smoke isn’t the only thing in the American air today – the latest TransUnion (NYSE: TRU) Consumer Pulse found a heavy cloud of pessimism about the state of the economy mixed with some buoyant optimism about personal finances.
First, the bad news. In its survey of 3,000 adults, TransUnion found 44% of respondents predicting the U.S. economy is either in a recession or will be by the end of June, while three in four respondents (75%) believed a recession will occur by the end of this year.
And now, the good news. Roughly six in 10 Americans (57%) said they were optimistic about their household finances for the next 12 months – the highest level since the last quarter of 2021. This jollity is raised despite having 46% of respondents acknowledging their income is not keeping up with inflation for everyday goods including groceries and gas.
Among the issues creating consumer anxiety, the survey found respondents citing high inflation (79%), recession (53%) and increased housing prices on rent or mortgage (45%) as their greatest concerns.
“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. “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. 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.”
“Conversely,” Wise added, “a majority of Americans are optimistic about their financial future. The number one reason: the unemployment rate remains near record low levels. 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.”
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