Breaking Down Top Macroeconomic Trends Impacting Banks

MX’s latest research of 1,000 U.S. consumers shows 22% of U.S. consumers are most worried about paying for everyday necessities, while one-third are most worried about paying for unexpected expenses or emergencies. 

Consumer expectations and money worries may be higher than ever — and trends point to higher credit card balances, lower savings rates, and a predicted recession as top areas where banks should be paying attention. Here’s a breakdown of the top macroeconomic trends impacting banks: 

1. Consumers Carrying Debt Longer: As consumers continue to recover from the COVID-19 pandemic and record-high inflation, credit card balances are higher than ever — and consumers will continue to carry those balances longer as they work to pay higher amounts at higher interest rates.
2.  The Need for Stronger Customer Retention: Consumers have little patience for sub-par experiences, and it’s becoming easier than ever to open a new account. As a result, banks will need to rethink how to retain customers for the long-term. 
3. New Regulations on the Horizon: The Consumer Financial Protection Bureau issued proposed rulemaking for Section 1033 in October 2022 to establish consumer rights for financial data. The CFPB expects to issue a proposed rule later in 2023, which will have significant impact for financial institutions for several years to come.  
4. Savings Balances Trending Downward: Consumers are increasingly struggling in the face of high prices and elevated interest rates. Before the pandemic, U.S. consumers saved approximately 8% to 9% of their income on a monthly basis. Today, the personal savings rate sits at around 2%, and we expect it to remain low in the face of a potential moderate recession. 
5. Inflation Set to Deflate: Initial spikes in inflation driven by the housing market, commodity prices, and demand shortages are winding down, which will decrease inflation rates over the next 2 years.   
6. A Mild Case of Recession: U.S. and global economies will likely face a moderate recession in the second half of 2023 based on a resilient job market, slowing inflation, and lower interest rates.