- A new TransUnion survey finds that Generation Z are the most optimistic about their financial outlook.
- This is despite the fact that inflation remains a major concern for all generations.
- This is partly because Generation Z has greater job flexibility and outperforms other generations in wage growth.
Generation Z feels good about their finances right now. Older generations can’t say the same.
While inflation slowed slightly year over year in May, it remains high, and with the Federal Reserve holding interest rates steady again on Wednesday, many consumers are feeling nervous.
But even with the combination of financial pressures, there is something new Survey from credit reporting company TransUnion She suggests Some Americans are optimistic about their own circumstances over the coming year. According to TransUnion’s Q2 2024 Consumer Pulse Study — which surveyed 3,000 adults from April 29 to May 8 — 55% of consumers said they were optimistic about their finances over the next year, expecting to see wage increases.
This was especially true for younger generations, with more than 60% of Gen Z and Millennials saying they were optimistic, compared to less than 50% of Gen X and Baby Boomers.
There’s good reason why Generation Z is optimistic. The hot job market means that they have the flexibility to leave their current jobs for higher wages elsewhere, and that they are starting to invest and save for retirement earlier than other generations did at the same age.
“A lot of this optimism comes from a really strong jobs market,” Charlie Wise, senior vice president and head of global research and consulting at TransUnion, told Business Insider.
“There are a lot of jobs out there for people who want them, and the ones who are often most positively impacted by that are younger consumers, those consumers who have the flexibility to say, ‘If I don’t like where I’m working,’ and ‘If I don’t like what I’m making now, I’ll make it,'” Wise said. “I walk down the street and I might do well.”
Despite this widespread optimism, rising prices continue to worry Americans. 84% of respondents ranked inflation as one of their top three concerns, an increase of five percentage points from the second quarter of 2023.
Additionally, according to the survey, everyday expenses like groceries, gas and utilities were at the top of consumers’ concerns when it comes to rising prices, and the other top two concerns were housing prices and interest rates.
Generation Z has their own concerns about high costs, too. Many are missing out on college due to student debt, and high rental costs are hitting many of them hard, especially if they don’t have the option of living with their parents or a roommate.
But Gen Z is outpacing other generations when it comes to wages, retirement savings, and homeownership, giving them reason to feel optimistic about their financial futures amid stressful economic conditions.
“Inflation, while still top of mind for many people, has eased significantly from the levels we saw in 2022,” Wise said. “
“At the same time, we’re also seeing that consumers are relatively confident about their financial future,” he added, and that “a majority of them are saying, ‘Yes, I feel good about me personally, but man, this inflation thing, this is really weighing on people.’
How can Gen Z feel good about themselves, but still worry about high prices?
BI previously reported that many baby boomers and Generation X cannot afford to retire or struggle financially in retirement.
According to a recent report from the Lifetime Income Alliance’s Retirement Income Institute, more than half of the “peak boomer” group — the final group of baby boomers who will start turning 65 this year — have assets worth $250,000 or less, meaning… They will have to put their savings to work and rely on Social Security in retirement.
But when it comes to preparing for retirement, Generation Z may be ahead of the game. According to a CFA Institute survey last year, more than half of Gen Z respondents said they were already investing, and 82% of them started doing so before they turned 21.
In addition, A paper Economists at the American Enterprise Institute and the Federal Reserve have found that the average 25-year-old earns more than $40,000 a year, more than 50% more than baby boomers at the same age, after adjusting for inflation.
To be sure, even though Generation Z earns more, they also face financial pressures that older generations at the same age didn’t experience. Bio a report A study from January found that young people today are much more likely to have student debt, and also have more mortgage debt than young people in 1992.
Overall, the TransUnion report said, Gen Z is “the most sedentary of any generation” in the second quarter of this year, citing 45% of them reporting pay increases in the past three months. But they could still be concerned about broader economic conditions.
“When you look at consumers and their feelings about their personal finances, when they see wage gains, for a lot of consumers, that to them feels earned. I worked hard, I deserved it. I got this raise because I deserved it. Inflation,” Wise said. “Something happens to them that comes from outside their control.”
“That’s why, even if prices go up 5% and their wages go up 5%, I feel really good about the 5% I’m making, but it’s like someone took that away from me in the form of inflation,” he added. “This not only makes people anxious, but in many cases, they feel very upset.”