According to the latest research by Mintel on attitudes about the economy, consumers in the US are not looking at the future through rose-colored glasses. Indeed, almost three in four (72%) US consumers think younger generations will have a more difficult time than they had, and nearly half (49%) think other countries offer better opportunities than the US.
Mintel’s research also shows it’s not just younger generations who have had a hard time in the current economic climate. It is actually younger Baby Boomers — those aged 45-54 and at the peak of their earning years — who are the least likely to say their finances are healthy. In fact, 41% of this group indicate their household financial situation is “tight”, “struggling” or “just getting by” five years after the recession, compared to 37% of Gen X (35-44 year olds) and 33% of consumers overall.
Susan Menke, VP, financial services at Mintel, said: “The factyounger Boomers are struggling with their household finances is bad news for economic growth, as it is this age group which is usually at the peak of their earning power, and has traditionally been a primary driver of consumer spending and therefore of the economy. This is also problematic for younger generations, as these younger Boomers will likely delay retirement for financial reasons, which will impact the already difficult job prospects for Millennials and Gen Xers.”
And when it comes to financial goals, consumers in the US are strongly focused on saving money for a rainy day and achieving or maintaining good credit. Some 76% feel having good credit is key to economic success and 87% of Americans are prioritising paying their bills on time. In addition, consumers are prioritising short term savings over saving for the long term — an indication they do not feel they have enough saved for contingencies. Some 81% are focusing on saving for emergencies or unexpected events, while 72% would like to add to, or increase the amount saved for retirement.
“Most consumers are living paycheck to paycheck and do not have nearly enough in their savings accounts to feel they are prepared for unexpected events, or to be able to maintain their current lifestyles in retirement. When credit was freely available and the housing market was booming, consumers felt they could rely on these as sources of funds for those needs. However, that is no longer the case, and consumers have refocused their financial priorities. So, even though households have the capacity to take on more credit, it doesn’t mean they will. It is probable the recession has created a new kind of consumer, one that is more conservative and has a renewed focus on achieving financial security by different means,” said Menke.
Interestingly, Mintel’s research also shows higher incomes aren’t necessarily experiencing a greater degree of financial security than other income groups. Some 10% of those with $150K+ in household income say they are struggling or just getting by, as are 16% of households with income of $100K-149.9K.
These income groups are experiencing some wage stagnation as well, with almost half (47%) of those earning $150K+ expecting their salaries to remain the same over the coming year. Other household income groups have the same expectations. Over half (57%) of US consumers overall are expecting a continuation of the status quo for their income in 2013, and half (50%) think the same about the total amount in their savings accounts.