- 81% consider inflation a major concern, the highest level
over the past year.
- Most middle-income households have remained current on their
bills, though more are making spending cuts to manage higher
prices.
- Gen Z and millennials have shifted their mindset around
homeownership and find flexibility in renting, with 6 in 10
believing homeownership as a sign of financial prosperity is
outdated.
- Federal Reserve rate cuts could unlock pent-up vehicle
demand, with 52% delaying a vehicle purchase over the last
year.
Santander Holdings USA, Inc. (“Santander US”) today announced
new findings from a survey that shows while middle-income Americans
remain optimistic about their financial futures, they continue to
navigate inflationary pressures and recession concerns. More
consumers (81%) consider inflation a major concern in Q3, and 86%
say it has impacted their daily lives. Despite this trend,
consumers remain resilient. Most middle-income Americans (76%) say
they have remained current on their bills, and more of them (71%)
say they are on the right track toward financial prosperity than a
year ago.
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(Graphic: Business Wire)
When it comes to their economic outlook and the possibility of a
recession, consumers are sending mixed signals. While economic
indicators suggest the economy is stable, a majority of
middle-income Americans remain uncertain. More than six in 10 (62%)
believe the United States is headed toward a recession in the next
year, though this is down from 2023 highs. At the same time, some
see potential for a soft landing, as two-thirds do not believe a
recession is likely to occur in the next three months.
Amidst concerns about inflation and economic uncertainty,
middle-income Americans are adapting to conditions. Most (89%) say
they have taken some action, such as scaling back on retail
spending, due to inflation. Additionally, less than one in four
(22%) are feeling insecure about their finances, down four
percentage points from a year ago.
“Consumers continue to take actions to manage their finances and
navigate economic stressors,” said Tim Wennes, CEO of Santander US.
“Their ability to make necessary budget decisions to remain current
on their bills and manage the overall economic uncertainty over the
past few years has helped to boost their confidence. Looking ahead,
I expect to see these behavioral changes lead to fundamental shifts
in consumers’ financial priorities.”
The survey identified a change in mindset around homeownership,
which is falling in importance as consumers seek out flexibility
and affordability, especially among younger generations. Seven in
10 Gen Z and millennials say owning a home was more important for
their parents’ generation. Meanwhile, vehicle access remains a top
priority. The majority (85%) say vehicle access gives them more
flexibility in where they live. More than half (52%) delayed
purchasing a vehicle in the past year due to cost, though lower
interest rates on financing options could help fuel more auto
purchases.
While many households continue to feel the effects of inflation,
few consumers have taken advantage of the higher rates available on
savings through a high-yield savings account or certificate of
deposit (CD). Six in 10 households have not yet moved their savings
to earn a higher rate of interest, and 24% are unaware of the
interest rate they currently earn. However, ongoing rate cuts could
prompt consumer action. Nearly half (47%) of middle-income
Americans say they are likely to open a CD to lock in a higher
interest rate as rates decline.
“Many consumers hold misperceptions about opening high-yield
savings accounts, including that they are too difficult to open or
aren’t worth the effort,” said Wennes. “Many consumers could be
putting their hard-earned savings to work for them by opening a
high-yield savings account, which can now take only a matter of
minutes. At Santander, we are working on introducing a new,
national digital offering that will reduce the friction to create a
fast onboarding experience and make it easier for customers to take
advantage of higher rates.”
The study, which built upon previous research, assessed
middle-income Americans’ current financial state and future
aspirations, with a focus on how current economic conditions have
impacted their households. It also explored their financial
relationships with drivers of prosperity.
Homeownership vs.
Renting
Middle-income Americans’ perspective on homeownership has
shifted, with many now valuing renting as an option. This is
especially true among younger generations. Six in 10 Gen Zers and
millennials believe homeownership as a sign of financial prosperity
is an outdated concept, and more than half (54%) agree that the
more renting options there are, the less necessary homeownership
becomes. Even among younger homeowners, 46% say owning a home is
more trouble than it is worth and miss the financial flexibility of
renting.
While many renters cite benefits such as flexibility to pursue
employment opportunities and access to more amenities, 60% of them
also believe renting is more affordable than having a mortgage, and
nearly half (48%) would be comfortable renting forever. Multifamily
housing – defined as properties with five or more residential units
– have proven to be cost-effective options for many middle-income
consumers. Of those residing in a multifamily unit, 66% agree they
are a good solution to produce more affordable housing options and
increase the housing supply.
Vehicle Access Critical for
Consumers
Middle-income Americans continue to rely on vehicle access. The
majority (84%) say it provides them with greater flexibility in how
they live their lives, and 77% depend on a vehicle to get to work.
While more than half (52%) have delayed purchasing a new vehicle in
the past year due to cost, more than four in 10 are considering
purchasing a new one in the coming 12 months. If interest rates
come down in response to rate cuts by the Federal Reserve, 30% say
they are likely to take out an auto loan. Meanwhile, vehicle
affordability is important to consumers as they continue to contend
with everyday price pressures. Most (80%) say fuel efficiency is
important, and 60% prioritize vehicle cost over size/space.
This research on financial prosperity, conducted by Morning
Consult on behalf of Santander US, surveyed 2,202 Americans who are
bank and/or financial services customers, ages 18-76. Survey
participants are employed or looking for work, own/use at least one
financial product and are the primary or shared decision-maker on
household finances with household income in the “middle-income”
range of ~$50,000 to $148,000. This Q3 study was conducted in
August 2024. The interviews were conducted online, and the margin
of error is +/- 2 percentage points for the total audience at a 95%
confidence level. Percentages may not total 100 due to rounding.
The data was weighted to target population proportions for a
representative sample based on age, gender, ethnicity, region, and
education.
The full report and more information about the Santander US
survey is available here.
About Santander US
Santander Holdings USA, Inc. (SHUSA) is a wholly-owned
subsidiary of Madrid-based Banco Santander, S.A. (NYSE: SAN)
(Santander), recognized as one of the world’s most admired
companies by Fortune Magazine in 2024, with approximately 168
million customers in the U.S., Europe and Latin America. As the
intermediate holding company for Santander’s U.S. businesses, SHUSA
is the parent company of financial companies with more than 11,800
employees, 4.5 million customers, and assets of over $165 billion
for the fiscal year ended 2023. These include Santander Bank, N.A.,
Santander Consumer USA Holdings Inc., Banco Santander
International, Santander Securities LLC, Santander US Capital
Markets LLC and several other subsidiaries. Santander US is
recognized as a top 10 auto lender and a top 10 multifamily bank
lender, and has a growing wealth management business. For more
information about Santander US, please visit
www.santanderus.com.
Santander Bank, N.A. is a Member FDIC and a wholly owned
subsidiary of Banco Santander, S.A. © 2024 Santander Bank, N.A. All
rights reserved. Santander, Santander Bank, and the Flame Logo are
trademarks of Banco Santander, S.A. or its subsidiaries in the
United States or other countries. All other trademarks are the
property of their respective owners.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241008356038/en/
Media: Andrew Simonelli andrew.simonelli@santander.us
Caroline Connolly caroline.connolly@santander.us
Banco Santander (NYSE:SAN)
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