Gen Z and millennials are feeling optimistic about their finances — Gen X and boomers, not so much
- Older generations aren't feeling too confident about their household finances, according to results from a TransUnion study.
- But Millennials and Gen Z are feeling good, likely thanks to the pay bumps they've seen over the last year.
With inflation at a 40-year high and gas prices skyrocketing, some Americans are not feeling too hopeful about their household's financial situation in the upcoming months.
But Gen Z and millennials are powering through.
New results from TransUnion's Consumer Pulse study show that younger generations are feeling the most optimistic about their household finances in the next 12 months. The results come from a survey of roughly 2,700 adults from May 12 to May 19.
Overall, 55% of Americans are feeling good about where their household finances stand in the next 12 months.
According to the study, 70% of millennials and 66% of Gen Z are optimistic about their household finances in the next 12 months, the two highest shares among generations. For this report, generation years were "Millennials, born 1980–1994; Gen X, born 1965–1979; and Baby Boomers, born 1944–1964." The oldest Gen Zers in this study were born in 1995 per the report.
According to Charlie Wise, senior vice president and global head of research and consulting at TransUnion, this optimism could be because young workers may be reaping the benefits of pay raises from employers as they deal with the labor shortage and Great Resignation. Wise said that although they're early in their careers and could be earning toward the "lower end of the pay scale," Wise said those in their 20s and 30s and lowest-income consumers are some of the people who have seen large wage gains.
"They're feeling more financially stable," Wise said about young Americans. "They're feeling like maybe they're in a job that's not quite as volatile."
Only 39% of Baby Boomers said they are feeling optimistic about their finances. One reason could be because "many of these consumers are seeing their own retirement nest eggs potentially take a near-term hit," Wise said. It includes Americans who are living on savings, depending on investment portfolios, and those living on fixed-incomes, Wise added.
"These consumers don't have a lot of the flexibility to absorb that quite the same way that active wage earners are," Wise said in regards to inflation. "So that's really what we're seeing, that some of the challenges with the retirees is the double whammy of inflation and maybe some near-term volatility in their investment portfolios."
Data from the University of Michigan's Surveys of Consumers also shows how people are feeling about their finances from a year from now. The most recent three-month moving averages show that a higher share of younger adults feels they and their families will be financially better off. Forty-four percent of 18 to 34 year olds, 33% of 35 to 54 year olds, and 17% of those 55 and over said this.
So although financial confidence varies, younger Americans are feeling more hopeful about their situation even amid high prices, such as with the climbing price of gas. The study shows Gen Z and millennials' number one concern is inflation — just like their older peers.
Wise said "the real strength of the economy right now is the job situation." He pointed out that Friday's report from the Bureau of Labor Statistics showed that 390,000 nonfarm payrolls were added in May and that the US has almost recouped all the jobs lost during the pandemic. Wise noted the low unemployment rate of 3.6%, which is the third month in a row of this rate, and that Americans are seeing wage growth, with average hourly earnings being 5.2% year-over-year in May.
"I think all of that contributes to a consumer that may have concerns about the world out there," said Wise, "but that may feel pretty optimistic about their own personal situation."
How is the economy affecting your life and decisions about work, money, and homebuying these days? Contact this reporter at mhoff@insider.com.