All signs might be pointing to a recession on the horizon, but consumers either aren’t getting the memos or they just don’t think it’s going to affect them very much, according to data released yesterday by the Federal Reserve Bank of New York. In fact, more consumers think they are going to be in a much better financial position a year from now than they are now.
The Survey of Consumer Expectations is a good look-ahead to give companies in the accounts receivable management industry the opportunity to see how consumers think their financial situations are going to change, and by how much. While the data may not appear to be helpful — because who really knows what the future is going to bring — from a planning and expectations perspective, it offers perspective into consumers’ state of mind while also reducing the chances of being surprised.
Fewer consumers expect not to be able to make their minimum debt payments than a month ago, which means more consumers expect to be in a position to meet their financial obligations. If consumers were worried about a recession, they might be worried about not being able to make their debt payments. Looking at the different demographics, the drop in debt delinquency expectations was driven by individuals making more than $50,000.
When asked about their expectations of their financial situations a year from now, 26.4% said they expect to be “much better off” or “somewhat better off”, compared with 22.7% in March. When asked if their financial situations were better or worse than a year ago, 21.3% said they were “much better off” or “somewhat better off” in April, compared with 18.9% in March.
One potential area of concern: the availability of credit. For the fourth consecutive month, more respondents said it was harder to obtain credit, and 52.2% of respondents expect it to be “much harder” or “somewhat harder” to obtain credit a year from now, compared with 50.3% in March.