Inflation and higher interest rates are taking a toll. Many are cutting back on nonessential items, such as dining out, and using credit cards for must-have purchases.
DALLAS – A consumer sentiment survey on spending and summer plans by ScoreSense, a credit score monitoring product, found that about half of American consumers are feeling financial stress. As a result, they’re canceling or postponing summer vacations.
Most consumers said they’re cutting expenses across all areas, including dining out and entertainment – and many had used personal loans to help pay for groceries (48%), utility bills (47%), rent and mortgage (42%), and car maintenance and vehicle fuel (both 41%). Nearly one in five respondents do not have an emergency fund, and 58% have enough to cover six months or less.
A separate market report from ScoreSense found that credit card delinquencies and over-limit cards both rose 14% in the first quarter of the year. At the same time, new credit-card inquiries were down 10% year-to-year in the first quarter.
“We’re really starting to see the worst effects of many months of staggering inflation and rising interest rates beating up consumers’ home budgets, with people falling behind on bills and changing plans for vacations and major purchases,” says Carlos Medina, senior vice president at One Technologies, LLC. “We’re seeing fewer people apply for loans, an indicator that consumers are postponing major purchases, and some may be struggling with their current credit lines. For those who have a negative credit standing, it’s also less likely that a lender would give them a new account or give them attractive interest rates for an account.”
High profile survey results
- 72% of respondents are either somewhat or very concerned about a possible recession this year, especially those ages 64 and older.
- 48% feel financially stressed, primarily due to inflation and higher prices.
- 50% are canceling or postponing vacation trips due to financial challenges, while 1 in 3 plan to spend less on expensive vacation locations.
- 53% planning a vacation this summer intend to spend less than $2,000, especially apparent among respondents without children (69%) compared to those with children (31%). Older respondents were more likely to spend less than $2,000 on summer trips than younger ones.
- 65% are eating out less than last year.
- In addition to dining out less often, people are spending less on entertainment (46%) and clothing (44%).
- 55% are using coupons and 57% are buying “on sale” as a money-saving strategy; 48% are buying store brand products.
- Overall, 38% are canceling or postponing purchasing a vehicle this year due to financial challenges – 43% of consumers with children.
- Within ScoreSense’s sample, 36% of respondents were dealing with federal student loans. Of those, 37% will resume payments without any help from others, 29% will need help from others to pay, and 34% will be helping their child/relatives/friends make loan payments.
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Source: https://www.floridarealtors.org/news-media/news-articles/2023/05/americans-start-cut-back-vacations-take-hit
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