A recent study by credit reporting agency TransUnion found that Gen Z, those in their early 20s, are facing financial challenges such as lower earnings, higher debt, and increased delinquency rates compared to Millennials at the same age. This study focused on Gen Zers aged 22 to 24 and compared their credit usage to Millennials in 2013. Both generations have faced economic crises early in their careers, with Gen Z dealing with the Covid-19 pandemic and Millennials facing the global financial crisis. Additionally, rising inflation and interest rates have further strained Gen Zers’ finances, as prices for essential items like gas and food have increased.
In the broader US credit economy, higher debt levels and delinquencies across various credit products have been observed. A separate TransUnion report noted that Americans’ total credit card balance exceeded $1 trillion for the first time in 2023. Since Gen Zers are still early in their credit journeys, it is crucial for them to develop healthy financial habits now to ensure their long-term financial well-being. Establishing good financial practices early on can help Gen Z manage their finances more effectively and avoid falling into excessive debt.
The interview with Charlie Wise, head of global research and consulting at TransUnion, highlighted some key factors contributing to Gen Z’s financial challenges, including rising living costs, especially rent, food, transportation, and gas prices. Wise emphasized the importance of understanding what one can afford and avoiding accumulating debt by continuously using credit cards and only making minimum payments. He recommended exploring options like refinancing credit card debt with personal loans to lower interest rates and consolidate payments, but cautioned against returning to the same spending habits after paying off debt.
While there is cause for concern regarding Gen Z’s financial health, particularly with higher credit card balances and delinquency rates compared to Millennials a decade ago, experts suggest that the situation is more of a “wait-and-see” scenario rather than a crisis. Gen Zers are likely to experience salary increases and career advancements, but it remains crucial for them to borrow and spend within their means to avoid financial instability. Developing responsible financial habits early on can help Gen Z navigate economic challenges and achieve long-term financial stability.
In the United Kingdom, the economy has shown signs of recovery following a short and shallow recession, with GDP growing by 0.6% in the first quarter of the year. This growth was primarily driven by expansion in the service sector, indicating positive prospects for economic recovery and growth. The Bank of England has revised its GDP growth forecast for the year, reflecting a more optimistic outlook compared to last year’s sluggish economic performance. While the UK economy continues to face challenges compared to its peers, recent data suggests a promising outlook for economic growth.
Looking ahead, upcoming events in the financial calendar include remarks from Federal Reserve officials, earnings reports from companies like Home Depot and Alibaba, and key economic data releases such as the Producer Price Index, Consumer Price Index, retail sales figures, and housing market data. These events will provide further insights into the state of the economy and may impact financial markets and investor sentiment. Stay tuned for developments in the financial landscape as economic recovery efforts continue and businesses adapt to changing market conditions.
