PYMNTS MonitorEdge May 2024

Consumer Confidence About Household Finances Highest in 3 Years

couple looking at finances

Consumers are more confident about the prospects for their household’s financial situation and the stock market than they’ve been in three years.

The share of consumers who expect their financial situation to be the same or better off 12 months from now — 78.1% — is the highest it’s been since June 2021, the Federal Reserve Bank of New York’s Center for Microeconomic Data said in a Monday (June 10) press release about its May 2024 Survey of Consumer Expectations.

The survey also found that the mean perceived probability that U.S. stock prices will be higher 12 months from now — 40.5% — is at the highest level since May 2021.

Several other measures of consumers’ expectations about household finance remained essentially unchangedor within the range that has been seen in recent months, according to the release. These measures include expected growth in household income, household spending and perceived probability of missing a minimum debt payment over the next three months.

One metric that did change was consumers’ perception of credit access. While this metric was largely unchanged compared to a year ago, consumers’ expectations about future credit access deteriorated, with a larger share of respondents expecting credit to tighten.

When it comes to inflation, consumers’ expectations are that it will decline in the one-year horizon, stay the same at the three-year horizon and increase at the five-year horizon, per the release.

“Median inflation uncertainty — or the uncertainty expressed regarding future inflation outcomes — increased at the one- and three-year horizons and declined at the five-year horizon,” the release said.

As far as the labor market, consumers’ expectations about expected earnings growth were unchanged, according to the release. Their expectations that the unemployment rate will be higher a year from now increased by 1.4 percentage points to a level that’s above the 12-month trailing average.

The mean perceived probability of finding a new job should one lose a current job increased by 1.3 percentage points after falling to a three-year low in April.

PYMNTS Intelligence found that as of January, 62% of consumers lived paycheck to paycheck, with the rising cost of living taking its toll on their finances.

Just 18% of overall wage earners said their incomes had kept up with inflation, according to “New Reality Check: The Paycheck-to-Paycheck Report: Why One-Third of High Earners Live Paycheck to Paycheck.”