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24th September 2021
TransUnion says despite summer reprieve from COVID-19 impact, consumers fear longer-term financial recovery
With the relaxation of lockdown, alongside hospitality and travel industries re-opening over the summer, consumers are less likely to think the pandemic has impacted their household income, according to recent research from global information and insights provider TransUnion.
In its Consumer Pulse study, which has been tracking the financial impact of the pandemic, TransUnion found that 25% of consumers believe their household income is currently being negatively impacted, down from 38% in Q1. The most dramatic drop-off can be seen among younger consumers, with just 31% of Millennials and 32% of Gen Z saying their overall household finances have been impacted, down from peaks of 44% and 50% respectively earlier in this year.
This improvement, especially among the young, comes as little surprise given the return of major employment sectors such as hospitality, events and travel, bringing about more stable employment conditions. This in turn has seen significant numbers of employees moved off job-support schemes, and the number of furloughed roles drop down to 1.8million, from a peak of nearly 9million.
“Right now, consumer resilience appears to be on the rise when it comes to household finances. However, our research reveals real concerns over the longer-term recovery from the pandemic and there are still pockets of hardship,” said Shail Deep, Chief Product Officer at TransUnion in the UK.
The study revealed that the number of consumers who said they were optimistic about the future decreased from 61% in Q2 to 54% this quarter.ii A likely influence is the fact that one in four(24%) consumers expect their household income to decrease in the future, a proportion which has remained consistent since Q2, despite the summer’s perceived stabilising effect on household finances.
Deep continues “Just under a fifth(18%) of consumers expect to be unable to pay at least one of their current bills and loans in full. And one in three(32%) financially impacted consumers believe they won’t be able to pay personal loan commitments–up from a quarter(25%) in Q1. With this in mind, it’s critical that credit providers have the right insights available to make robust affordability assessments when it comes to new applications, as well as being able to predict future payment behaviour as accurately as possible, using a comprehensive picture of the individual’s financial situation.”
One in four(24%) consumers still intend on either applying for new credit or refinancing their existing arrangements within the next 12 months, with younger spenders again the most buoyant age group. Over a third(34%) of Millennials and 42% of Gen Z plan on making credit applications, with credit cards remaining an important means of finance for younger demographics, despite the dramatic rise of alternatives such as buy now, pay later products. Amongst Gen Z planning to apply, more than one in three(38%) are looking to apply for a new credit card in the next year—an increase from 26% in Q2.
TransUnion Trends(27 articles)