Banking and Payments Intelligence Report
November 2023
Even as Inflation Eases, U.S. Bank Customers Frustrated by Stubbornly High Prices
The recent news on inflation has been positive, but the financial health scores[1] of banking customers in the United States have not budged.
According to the latest JD Power data, while the inflation rate has dropped to 3.2%, the percentage of customers that are financially healthy remains near an all-time low. What’s more, customers say that they feel less empowered to manage and more affected by inflation.
The problem, it seems, is that even though topline inflation rates have slowed, the prices of consumer goods have remained higher than ever, leaving many consumers uncertain about whether they can keep up with rising costs.
The Doldrums
One month after customers’ financial health status dipped to all-time lows, not a lot has changed. Less than one-third (30%) of respondents are financially healthy, while 46% say they are vulnerable.
Customer sentiment regarding financial health status, stress levels and empowerment to improve their financial situation rebounded slightly, but all are comparable to 2022 levels, when the economy was in a much more tenuous state.
The Price is Wrong
While the economy has provided some positive signs, including GDP and employment growth, bank customers are still having trouble with consumer prices. More than three-fourths (76%) of customers said that the price of goods they buy is increasing faster than their income, a rate that was highest among stressed customers (88%).
It all amounts to a counterintuitive trend in which the effects of inflation have begun to rise again, and customers’ confidence in their ability to manage inflation has fallen off since the summer, all while the rate of inflation has slowed. That’s largely due to the fact that, although the inflation rate has been declining, the Consumer Price Index up 3.3% over the past year.
’Tis the Season
As high prices continue to wield an outsized influence on consumers’ financial health, banking customers are staring down their next big hurdle: the holiday season. Regardless of their financial health, consumers will likely be going into spending mode during the next few months. That presents an urgent need for banks to step in and be proactive in offering personalized assistance.
With more than two-thirds (70%) of customers categorized as financially unhealthy, an influx of holiday debt could create significant challenges. Banks that show customers how they can help them navigate their existing financial situations and have new budgeting and repayment solutions to help mitigate their holiday exposure, will both improve their relationships and help keep clients from digging themselves a deeper hole. It’s a matter of time before the price of goods eases along with inflation, but banks will have to help customers bridge that gap to better days.
Find out More
This Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in October 2023. It was authored by Jennifer White, senior director of banking and payments intelligence at JD Power. Please contact us at the numbers below to connect with Ms. White or to learn more about the underlying research.
Media Contacts
Brian Jaklitsch; East Coast; 631-584-2200; [email protected]
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]
[1] JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.