People are finally starting to feel the benefit of the recovery in their pay packets. After five years, average wages are finally increasing more quickly than prices. Although this will take time to feed through into consumer confidence, there are signs that spending habits are changing.
People are making more use of credit, for example, showing that they’re confident enough to bring forward spending in the expectation of future pay rises. And Mintel’s research showed an increase in planned financial activity in January, particularly when it comes to big-ticket purchases such as holidays and home improvements.
Table of Content
An end to the income squeeze, but people are still wary
Millennials are leading confidence upwards
Key economic indicators
Figure 1: Key economic indicators, January 2015
Current Financial Situation
Will the feel-good factor return in time for the 2015 election?
Figure 2: “How would you generally describe your financial situation at the moment?”, January 2015
The economic recovery will take time to feed through into consumer sentiment
Figure 3: Financial wellbeing index, 2009-15
Generation X are feeling the squeeze
Figure 4: “How would you generally describe your financial situation at the moment?”, by age, January 2015
Changes in Financial Wellbeing
23% say that they’re better off than at the start of 2014
Figure 5: “How would you describe your finances compared to a year ago?”, January 2015
Two years of stability
Figure 6: The recovery index, 2011-15
More than a third of Millennials say their finances have improved…
while 10% of baby boomers say that they are much worse off
Figure 7: “How have your finances changed over the last 12 months?”, by age, January 2015
Confidence edged upwards in January 2015
Figure 8: “And how do you feel about your financial situation over the next year or so?”, January 2015
Figure 9: Financial confidence index, 2009-2015
Generation Xers are facing an uncertain future
Figure 10: “And how do you feel about your financial situation over the next year or so?”, by household income, January 2015
A New Year boost to spending plans…
and there are clear signs that people are looking for an excuse to spend
Figure 11: “Thinking about how you spend your money, which of the following have you done over the last three months? And which do you plan to do over the next three months?”, January 2015
Figure 12: Spending index, 2012-2015
Youthful enthusiasm? Or just a lack of responsibilities?
Figure 13: Spending index, by household income, January 2015
What it Means
Expect improvement – But not elation
New year, new washing machine?
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