TransUnion Consumer Pulse Report Q4 2023

TransUnion’s quarterly survey explores how consumers’ personal finances have changed and what changes they expect in the future. The study measures shifting consumer attitudes and behaviours based on the dynamics of income, debt and identity theft. The analyses and insights give consumers a voice and inform businesses’ decision-making as they seek to create economic opportunity for consumers.

Economic Snapshot

Amongst the cost of living crisis, there were increasing signs of hope from a consumer perspective. Unemployment remained low in the tight jobs market,1 driving higher wage growth in 2023 and outstripping inflation in recent months.2 At the same time, energy prices stabilised well below the crisis peak, and inflation growth rates fell to 4.7% in October 2023, down from 6.3% in September.3,4 Most importantly from a consumer perspective, inflation rates are expected to continue following a downward trajectory in coming months, allowing the Bank of England to keep policy rates steady at 5.25%.

Growing personal optimism

Personal consumer sentiment was overwhelmingly more positive than this time last year with 37% feeling optimistic about their household finances, up from just 28% in Q4 ‘22. The generation that showed the greatest optimism was Gen Z at 53%, up from 45% YoY. That optimism divide can possibly be explained by the notable divergence in income growth.

Forty percent of Gen Z consumers stated their household incomes are keeping up with the rate of inflation, the highest among generations. Conversely only 17% of Gen X said their incomes are keeping up with inflation, the lowest among age groups.

Consumers still displaying recessionary behaviours

Despite optimism and significantly improved economic fundamentals, a generally negative sentiment remained amongst consumers regarding the state of the economy. There’s a majority (60%) perception amongst consumers we’re in a recession or will be in one by the end of this year, and while that’s improved from 72% in Q3 ’23, it’s still potentially a primary driver of consumer financial behaviour, especially as we head into the holiday season.

Among those who said we’re currently in a recession or heading for one by the end of this year, 68% were preparing by reducing spending, building up savings (39%) and paying down debt (22%). This consumer response to the economic climate naturally affects retail and economic performance and will likely translate to a slower holiday spend period