NEW YORK—Despite inflation improving, new data show consumers’ balance sheets are not improving.
According to J.D. Power, the percentage of bank customers in the United States who are financially healthy has only modestly improved, while the number of customers who say the cost of goods is increasing faster than they can afford has increased in the past month.
“It's a fact that is difficult to reconcile, leading some analysts to wonder just how reliable some customer feedback is. Notably, 28% of customers say they do not track their own financial status, leaving banks with the uphill task of building products and offering services to a clientele that is often in the dark about their actual situation and needs,” JD Power said.
Inflation Becomes Enigma
The number of customers who are financially healthy rose slightly to 32%, while 44% of bank customers fall into the vulnerable category.
For the first time in four months, the number of bank customers who say that the cost of goods is increasing faster than their income increased (68%). That rise comes amid the lowest inflation numbers in recent memory.
Relief Hard To Come By, But Lack Of Tracking Breeds Confusion
“When asked about where they have experienced relief from inflation, customers express modest improvement from six months ago. Grocery and restaurant prices show the most improvement, but shockingly, 34% of customers say prices have not gone down for any goods. Those rates are highest among financially stressed and vulnerable customers, but even 30% of healthy customers say they have not felt any relief,” JD Power said.
Even as customers continue to express struggles, there seems to be a disconnect between what customers feel and what they actually know. While some customers are using either banking digital tools or a personally made system, a surprisingly high 28% of customers admit that they do not track their finances with any digital tool or other system, JD Power said.
A Need For Clarity
Even with inflation easing, it is clear that customers are not feeling immediate relief. After being under duress for more than two years, financial health improvements are likely to lag inflation’s downward trend. That means that inflation is still a factor in many Americans’ day-to-day financial decisions, JD Power explained.
“For banks, this creates an interesting dilemma. With so many customers making choices, both financial and political, based on inflation, yet such a sizeable portion of them refusing to track their finances, it is difficult to build an outreach strategy. Banks will need a multi-pronged approach that incorporates financial literacy, vigilance, and planning to help customers out of the cycle of stress that they’ve been experiencing,” JD Power said.
The Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in August 2024. It was authored by Jennifer White, senior director of banking and payments intelligence at J.D. Power.