Consumers feel nearly 8% more confident about their financial outlook than they did one year ago, according to the latest WalletHub Economic Index, released.

Monthly Survey

The WalletHub Economic Index is a monthly survey that evaluates economic prospects based on 10 components of consumer sentiment. These components revolve around how people feel about their finances, purchasing plans, and employment opportunities.

Key Stats – Positive Outlook

  • Large purchases are a priority: In November 2023, consumers were 18% more likely to purchase in the next six months than they were at the same time last year.
  • Real estate popularity rises: Home-buying interest among consumers increased substantially by nearly 15% in November 2023 compared to last year.
  • Increasing interest in auto purchases: The share of consumers who expected to buy a car in the next six months was roughly 10% higher in November 2023 compared to last year.
  • Increase in debt-reduction confidence: The share of consumers who expected to have less debt in six months was 3.5% higher in November 2023 compared to last year.
  • Higher sense of job security: People’s confidence in having a job in the next six months was  2.6% higher in November 2023 compared to last year.

Key Stats – Negative Outlook

  • More stress: Consumers’ stress levels regarding money were 8% higher in November 2023 compared to the same period last year.

Feelings About Finances

How consumers feel about their finances is a good indicator of the direction the economy is taking as a whole, and things seem to be moving in a positive direction right now. Consumers’ confidence in their finances rose nearly 8% year-over-year, according to the latest WalletHub Economic Index. The index evaluates economic prospects every month based on a survey that measures 10 components of consumer sentiment regarding finances, purchasing plans, and employment opportunities.

“The 8% uptick in consumer sentiment in the past year is encouraging because it indicates that the economy is recovering from the damage it suffered over the past few years,” said Cassandra Happe, WalletHub analyst in a news release. “People who are confident in their finances are likely to consume more and pay down their debt, both of which are positive for the overall economy.”

Another encouraging result from the November WalletHub Economic Index is that consumers’ likelihood of making a large purchase in the next six months is 18% higher than it was last year. This demonstrates that people have the confidence to part with large sums of money, which is a sign that conditions are improving and an indicator that the economy will grow stronger as more people put money into it in the coming months.

WalletHub Economic Index Stats

  • Large purchases are a priority: In November 2023, consumers were 18% more likely to purchase in the next six months than they were at the same time last year.
  • Real estate popularity rises: Home-buying interest among consumers increased substantially by nearly 15% in November 2023 compared to last year.
  • Increasing interest in auto purchases: The share of consumers who expected to buy a car in the next six months was roughly 10% higher in November 2023 compared to last year.
  • Increase in debt-reduction confidence: The share of consumers who expected to have less debt in six months was 3.5% higher in November 2023 compared to last year.
  • Higher sense of job security: People’s confidence in having a job in the next six months was  2.6% higher in November 2023 compared to last year.
  • More stress: Consumers’ stress levels regarding money were 8% higher in November 2023 compared to the same period last year.

The WalletHub Economic Index demonstrates a lot of positive signs when it comes to consumers acquiring property. For example, home-buying interest increased by nearly 15% compared to last year, and the share of consumers expecting to buy a car in the next six months went up by around 10%. Although interest rates are very high for homes and vehicles right now, that hasn’t necessarily deterred interest in buying in the future.

Job Prospects

One of the reasons why consumers can be more confident about their financial outlook is that their job prospects are strong. WalletHub’s survey found that people’s confidence in having a job in the next six months is 2.6% higher now than it was last year. Having a stable job enables debt reduction, which also explains why 3.5% more consumers expect to have less debt after the next six months compared to last year.

While things seem to be looking up for consumers in general, not everything is positive. “One concerning detail from the November WalletHub Economic Index is that consumers’ stress levels regarding money are 8% higher compared to last year,” Happe said. “Even though people do have the confidence to spend more, they’re still feeling a bit uneasy, which makes sense given how volatile the economy has been in the past few years.”

Tips for Improving Your Confidence in Your Finances

  • Budget carefully. Develop a thoughtful budget outlining your income, expenses, and debts to gain a clear understanding of your financial situation. Try to see what luxuries you can reduce or cut out to put more money toward paying down debts or building your savings.
  • Set up an emergency fund. You should set aside at least a small amount of money each month to establish an emergency fund until you have 3 to 6 months’ worth of expenses in it. This fund acts as a financial safety net, providing security in the face of unexpected expenses.
  • Pursue additional sources of income. Diversify your income streams by exploring side gigs, part-time work, or freelancing opportunities. You could also ask for a raise with your current employer. Pursuing additional sources of income bolsters your financial stability and enhances your confidence in your ability to generate revenue.
  • Educate yourself about personal finance. Invest time in learning about personal finance principles by reading articles online or taking classes, which will allow you to make informed financial decisions and improve your situation.
  • Try to save and invest a little bit every month. Having a few month’s worth of money stashed away for a rainy day is good. But once you have that, you should also start saving for big goals like buying a house or a car, as well as investing for your retirement. Although many people may not have much money to spare, even modest contributions each month can accumulate over time. Plus, if you get into the routine of saving and investing even when you don’t have much money, you’ll be primed to put more away when your financial situation improves.

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Source: WalletHub