Simon-Kucher Study Finds Overwhelming Number of American Consumers Struggling to Navigate the Inflationary Economic Environment

New segments are emerging and bank customers are exhibiting the need for more financial guidance and resources 

NEW YORK, February 2, 2023 – Simon-Kucher, a global strategy and marketing consultancy, today released results from its Retail Banking Consumer Sentiments Study examining the state of consumer opinion about the economic environment in the US. Inflation remains high at 6.5% annually, economic growth is slowing, and financial institutions are bracing for a recession.  

The Simon-Kucher study found an overwhelming majority (59%) of Americans identifying themselves as feeling negative about the current economic environment. These pessimists used negative statements such as "We're in for a long-winter," "I see no end in sight," or "This is bad," to describe the economy. The study also found a minority (11%) of consumers with a positive outlook, using optimistic statements like "I'm feeling good" to describe the economy. Almost one-third (30%) of consumers had an indifferent or mixed sentiment about the economy where they used either a neutral statement, or both positive and negative statements to describe the economy.    

"Consumers are struggling to protect their financial standing against inflation, and it is leaving them feeling anxious, fearful and bitter," said Rohan Shah, Partner at Simon-Kucher. " Relying on demographic segmentation alone is no longer enough to deliver meaningful experiences that resonate with customers. This is the time to reframe the banking experience to recognize customers’ new pain points and need for financial guidance."   

Simon-Kucher’s study found segment-specific lines around consumer sentiments and banking behaviors. For example, optimists or people who used positive statements to describe the current economic environment, were consistently more price sensitive or responsive to interest rates changes, while pessimists showed a greater need for financial guidance and support.  

"A remarkable number of people with a gloomy outlook on the economy are telling us they are struggling to protect their financial standing against inflation," said Leonie Kriett, Director at Simon-Kucher. "These pessimists need access to financial education, digital tools, and guidance to help them make informed financial decisions. There is an opportunity for banks to elevate the banking relationship, build trust and confidence."  

The study found a number of distinguishing characteristics separating optimists and pessimists including:  

• Optimists own more bank products and have more experience using sophisticated financial products: Optimists own more bank products and are more comfortable leveraging sophisticated credit, savings, and investment instruments to help them reach their financial goals. For example, optimists are three times more likely to have a personal line of credit compared to their pessimistic counterparts (31% versus 9%). Optimists are also 50% more likely to use personal loans compared to pessimists. 

• Optimists are taking action to fight inflation: Optimists are more likely to move money into interest-bearing savings accounts to take advantage of high interest rate environments (53% optimists vs. 34% pessimists). Pessimists are more likely to do nothing (11% pessimists vs. 7% optimists). As interest rates continue to rise, optimists will have a strategy in place to protect their financial position. Pessimists have been slow to react and will most likely do nothing.  

• Optimists are proactively and diligently searching for ways to improve their financial situation: The survey found optimists closely monitoring and keeping their fingers on the pulse of interest rate movements. As many as 49% of optimists said they looked up interest rate information 11 times or more in the past month (compared to 13% of pessimists). Pessimists are also twice as likely to not have looked up interest rate information in the past month and to be unaware of current savings yields.  

The survey revealed that income is a poor predictor of consumer sentiments. Americans with negative outlooks earned just as much as those with positive outlooks. Income is also a poor predictor of money management skills. Despite having similar household incomes, Simon-Kucher found pessimists consistently had less money in the bank compared to optimists. 

Click here for more information about the study.   

*About the study: In October 2022, Simon-Kucher conducted a consumer sentiments study which captured 522 responses from men and women residing in the US with annual household incomes above $75,000 and a savings account.  

About the authors: Rohan Shah is a partner and Leonie Kriett is a director at Simon-Kucher. Both are based in the New York office.   

For more information, please contact:

Name: Josie Lee

tel: +1-917-767-4477

e-mail: Josie@telluspr.com

Name: Niki Irby

Email: niki.irby@simon-kucher.com

www.simon-kucher.com

About Simon-Kucher 

Simon-Kucher is a global consultancy with more than 2,000 employees in 30 countries.

Our sole focus is on unlocking better growth that drives measurable revenue and profit for our clients. We achieve this by optimizing every lever of their commercial strategy – product, price, innovation, marketing, and sales – based on deep insights into what customers want and value. With 37 years of experience in monetization topics of all kinds, we are regarded as the world’s leading pricing and growth specialist.