“Credit Card Debt Is Bad for More Than Just Your Finances.”
That’s the headline from a recent New York Times article covering a recent study from the University of Missouri that found “The stress of carrying card debt through adulthood is linked to poor health.” The study used U.S. Department of Labor data to analyze the financial health of nearly 7,900 Baby Boomers (aged from 28 to 40) over more than a decade. The study then looked at their physical health at age 50.
Researchers found “that people who carried consistently high levels of unsecured debt were 76 percent more likely to have pain that interfered with their daily life than people with no unsecured debt.”
This means that our industry can do a lot of good by working with consumers to help reduce their debt, and by offering robust omnichannel communications to allow consumers to communicate with debt collectors using their preferred method of communication (as some find it intimidating to talk over the phone about debt issues.) All of this adds up to helping reduce the stress for those currently carrying debt.
“U.S. Prices, Wages Rise at Fastest Pace in Decades.”
The Wall Street Journal carries that headline for their article reporting that “Consumer prices rose at the fastest pace in 30 years in September while workers saw their biggest compensation boosts in at least 20 years, according to new government data.” The article notes: “Persistently high inflation could offset the increase in wages and make households worse off.”
The article suggests that the rising figures could result in the U.S. Federal Reserve tapering its asset purchases more rapidly than previously suggested, as well as boost pressure on the Fed to increase interest rates.
The Wall Street Journal quotes Ian Shepherdson, Chief Economist at Pantheon Macroeconomics, as saying: “This is a really rough ride for the next few months.” He said each passing month of rapidly rising consumer prices puts added pressure on Federal Reserve Chairman Jerome Powell. Shepherdson added: “It lays out the possibility that the Fed has to move earlier, not because they’re walking away from their central view [that inflation will be transitory] but because the risks of being wrong have gone up.”
Credit and Collection News reports “Highest Rate of Inflation Uncertainty in ‘Nearly 40 Years.’”
That figure emerges from the most recent University of Michigan’s Consumer Sentiment Survey, released at the end of October. The Credit and Collection News article quotes the report’s Chief Economist, Richard Curtin as saying: “The positive impact of higher income expectations and the receding coronavirus has been offset by higher rates of inflation and falling confidence in government economic policies.”
Curtin said that consumers not only anticipated the highest year-ahead inflation rate since 2008 in the October survey, but that consumers also expressed greater uncertainty about the inflation rate for the year ahead than anytime in “nearly 40 years.”
The article reads, “It’s important to note that declining living standards due to inflation were spontaneously mentioned by at least 20% of households.” Similar concerns were voiced in a recently released poll conducted by the Associated Press and the National Opinion Research Center.
The Washington Post reports the poll found “Just 35% of Americans now call the national economy good, while 65% call it poor. That’s a dip since September, when 45% of Americans called the economy good, and a return to about where views of the nation’s economy stood in January and February, when the pandemic was raging across the nation.”
“Pandemic Widens Mobile’s Lead as Preferred Way to Bank, Survey Finds.”
That’s the headline from a recent BankingDive dive story on a study from the American Bankers Association (ABA). The story reads in part: “Mobile banking was already the most popular method for American consumers to interact with their bank accounts before the COVID-19 pandemic struck. But since March 2020, the proportion of customers using mobile platforms has jumped 11 percentage points.”
The ABA survey, conducted by Morning Consult, found the proportion of customers for whom in-branch visits were the top option for banking fell by the same margin—11 percentage points—in the same timeframe. About 10% of users preferred to visit a brick-and-mortar location post-COVID, compared with 21% before, according to the ABA.
The article quotes Rob Morgan, the ABA’s Senior Vice President of Innovation Strategy as saying: “Digital banking was on the rise long before COVID-19, but the growth in mobile app use accelerated as the pandemic made in-person banking more challenging. Today’s banking apps are extremely sophisticated, and this survey shows that many consumers who try them quickly make mobile their banking method of choice.”
National Mortgage Professional Magazine: “U.S. House Prices Are Exponentially Outpacing Income.”
Writing about a recently released report from Real Estate Witch, National Mortgage Professional Magazine notes: “Americans need an average income of $144,192 to afford a home, however the median household income is actually $69,178. Close to 90% of major metros have a house-price-to-income ratio that exceeds the maximum recommended ratio of 2.6.”
According to the report, from 2019 to 2021, the average house-price-to-income ratio increased from 4.7 to 5.4—a 14.9% increase that’s more than double the recommended ratio of 2.6. Essentially what this means is homes cost 5.4x what the average person earns in one year.
The article quotes the report’s author, Michelle Delgado, as saying: “The current average house-price-to-income ratio means it takes prospective home buyers 5.4 years to save enough to purchase a home. These exorbitant home prices also mean monthly mortgage payments place a major financial strain on homeowners, even if they manage to save enough to purchase a home.”
Ray Peloso, Chief Customer Officer at Finvi, brings 25 years of diverse consumer lending experience, having held executive leadership roles at Royal Bank of Scotland, Capital One, Citibank, MBNA and Katabat. Ray’s prior expertise in consumer credit and lending underpins a clear vision and understanding of the challenges faced by our clients in today’s rapidly evolving digital economy.
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