TROY, Mich.– A majority of U.S. consumers continued to face financial strain in August despite a modest improvement in overall financial health, according to a J.D. Power Banking and Payments Intelligence Report.
The share J.D. Power classified as financially unhealthy fell three percentage points to 63%. That category includes consumers the company describes as financially vulnerable, overextended or stressed. J.D. Power cautioned that the shares of overextended and stressed consumers changed little, raising questions about whether the improvement will last.
Over the past six months, 68% of consumers said they had experienced financial challenges. Among the problems cited, 31% reported insufficient long-term savings, 29% had little or no emergency savings, and 24% said their spending exceeded their income.
Everyday Costs a Concern
Everyday costs remain a concern. In August, 43% of consumers said their usual monthly expenses felt less affordable than they had six months earlier, unchanged from the previous reading. That figure was 55% among financially vulnerable consumers and 51% among stressed consumers.
J.D. Power said 76% of consumers had changed their day-to-day spending in August, a share virtually unchanged over the previous two months. The changes included:
- Cutting back on dining out and entertainment, cited by 42%.
- Switching to less expensive brands or stores, 32%.
- Delaying discretionary purchases, 27%.
- Cutting back on groceries or skipping meals, 25%.
- Borrowing from family or friends to cover expenses, 17%.
- Missing rent, mortgage or utility payments, 8%.
Stresses Over Utility Costs
Concern about grocery and gasoline costs has leveled off, but 23% of consumers reported stress over utility costs, J.D. Power said. The company said heating costs could add to that concern in the coming months.
The report also found that 15% of consumers said they had no financial plan and 13% said they lacked sufficient financial knowledge. J.D. Power urged banks to help customers plan for expenses over the next six to 12 months.
