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Market Pulse is a monthly podcast by Equifax, in partnership with Moody’s Analytics. Equifax hosts bring you interviews with industry experts on the latest economic and credit insights that can help drive better business decisions. Whether you’re in financial, mortgage, auto or another service industry, we help make sense of the latest economic conditions that impact you. This podcast series supplements our Market Pulse webinars, which occur on the first Thursday of each month.
Welcome to the Market Pulse
podcast from Equifax. I'm your host,
Tom O'Neill, senior advisor with Equifax,
where we look out onto the macroeconomic
and credit environments to see how they
impact financial institutions
and American households.
We focus on helping clients navigate
economic uncertainty while identifying
opportunities for growth in
the consumer credit space.
I'm thrilled to be joined today by Ian
Wright, chief Strategy Officer for IXI.
As leader of the IXI network,
Ian leverages data on more than $30
trillion worth of consumer deposits and
investments to help financial
services to help financial service
marketers with their
most challenging needs.
Today we're gonna be discussing trends
in wealth post COVID and how those
differing trends impact consumers and
what financial institutions need to know
about it. But before we get started,
let's get a quick economic update from
our friends at Moody's. Analytics.
Trade deals are all the rage right now
as the Trump administration's August 1st
tariff deadline looms.
Several agreements have been struck
in the lead up to the deadline,
including with Japan
and the European Union,
which will each face a 15% import
tax and pay no tariff on US
exports heightened uncertainty from US.
Trade policy has weighed
on hiring and production,
but cemented trade agreements will clear
the fog going forward within the US.
Price pressures from higher
tariffs have been muted so far,
but are starting to emerge.
The consumer price
index rose 0.3% in June,
bringing the year ago rate to 2.7%,
which is up from 2.4% in the
previous month, core CPI,
which excludes food and energy rose 0.2%,
and the annual rate increase
from 2.8% in May to 2.9% in
June. Now,
some of the increase in the annual
inflation numbers in June were due to
unfavorable base effects, as inflation
was soft at this point last year.
But certain tariff sensitive goods,
like household appliances, for instance,
showed a meaningful increase
in prices as results of firms
passing down higher costs from
import taxes to consumers.
Now, tariffs are altering
consumer behavior.
Many consumers front loaded purchases
earlier in the year to get ahead of
expected tariff increases as sales then
plummeted in May as tariffs rose and
forward buying ended before partially
rebounding in June. But nonetheless,
retail sales are only a touch above
December levels in the aggregate.
As consumers feel the force, the
tariff induced price increases,
they will pull back on spending even more.
There is pressure on the Fed to
start easing monetary policy,
but with inflation proving stubborn,
there appears to be little
appetite to cut rates.
The Fed has to strike a balance between
stable prices and maximum employment,
both of which can be simultaneously
undermined by tariffs. However,
since tariffs generally
represent a one-time price shock,
it seems likely that the Fed
will prioritize the labor
market as growth slows.
Therefore,
we anticipate 2 25 basis point
cuts this year in September and
December.
Thank you, Moody's. So, Ian, welcome.
Thank you for joining us today.
Thank you. Great to be here. Tom, always
great to have a conversation with you.
Yeah, I always enjoy our conversations
and, but this one's being recorded,
so we have to watch what we say
. I wanted to start off by,
by bringing up the, the
wealth trends reports that,
that Equifax is just releasing
based upon the IXI data that
I mentioned in the, the intro.
And that report highlights pretty
significant wealth growth since the
2008 recession. It's the,
the growth has actually reached 66
trillion, you know, by, you know,
by the middle of last year, I
think it was. What really are the,
the primary drivers of that growth?
Yeah, it's been a, a fantastic
decade and a half for consumers,
but as we'll see,
maybe that's been a little uneven
depending upon who you are and where your
economic and financial capabilities exist.
But it's really been the stock market
that has been fueling wealth especially
post COVID. Just between
2001 and two thou, sorry,
2021 and 2026 total
consumer assets went up by $6
trillion. So six of that six,
$6 trillion million occurred
just in the last five years.
So about 9% growth even just recently.
Wow. That's, and, and obviously since
it's, since so much of that has,
has happened within the, the stock market,
I would imagine that it hasn't quite
benefited all households, you know,
equally across that can
you give a, I know we,
we can certainly go really deep
into this conversation and,
and probably will but what, what,
what are the different segments that
have been influenced differently by this,
this growth and wealth?
The growth has been
interesting, as you said.
So I looked at where were consumers
in 2021 and and where were they
In 2024,
I saw what I call the typical consumer
household looking at the median household
using medians instead
of means or averages.
So we don't have those very wealthy
people kind of pulling up and skewing the
picture a bit.
But even though wealth increased by
five or $6 trillion during that period,
the median value,
the median household value for
wealth actually decreased to $66,000.
Investments went down by 12%.
Deposits stayed about even.
So then you kind of have
this conundrum, right, well,
how did wealth increase
overall mm-hmm .
But then how did the typical consumer
actually be worse off during that
experience? And it's, as you said,
the growth hasn't been even
we look at consumer wealth in
three different tiers. If
you look at the middle tier,
which is the mass affluent,
they have a hundred thousand dollars to
a million dollars in total deposits and
investments.
That segment consists of
about 44 million households,
and it reduced by about 4%,
both in the number of households that
are in the segment and also by the
number of assets that it controls.
Now, where did those households go?
Most of them went down to
what we call the mass market,
which have less than a hundred
thousand dollars. Wow. That segment,
which is about 75 million households,
actually increased by
7% in household counts,
but only 1% actually in assets.
So we see that middle
tier actually going down,
but not contributing to the wealth
when it did go down in wealth.
On the other end of the spectrum
is we do have a good story,
and this is where the growth does occur,
and that's with the affluent households.
If you're someone who
has a million dollars,
your wealth probably grew over
that five year, or I'm sorry,
that four year period. In fact,
the 14 million households that they're
in that segment they grew their assets by
17%. So when we're talking about growth,
we're really looking at that sliver
of households in the us right.
And they hold nearly three
quarters of all the wealth.
It's, it's interest, what
you're describing people,
a a large movement moving
out of the, the middle tier,
essentially a lot moving down. I
would imagine some moving up into the,
and that middle tier,
the, the mass affluent,
you essentially shrieking
shrinking over that time period.
It's fascinating because that's exactly
what we've seen in the credit side
of, of the, the world as well,
obviously here at Equifax. You know, we,
we have a ton of, of credit data that
we're constantly sifting through and,
and looking for, for meaning within.
And we've seen a lot of that same type of,
of circumstance. You know, we've,
we've been referencing the K shaped
for probably the, the same four or five
years that, that you're talking about.
And we, we reference it both in terms of
economic terms as well as credit terms.
And essentially what that is, it's,
it's as simple as it sounds, you know,
envision a k you know, you've got,
you know, a k with a, you
know, perpendicular line,
and then you've got one, you know,
line shooting upwards and one
line shooting downwards. It's as,
as simple a visualization as
that. And it, it represents that,
that that trend of a lot of households,
a lot of consumers thriving, doing
just fine. Thank you very much.
And then others that are,
that are truly struggling,
and certainly that's, that's always the
case, you know, from the dawn of time,
that's always been the case where
you have your haves, your have nots.
What's particularly interesting over
the last few years is how much that gap
between those populations has grown.
You, you mentioned.
You, you mentioned the, the, the
differences in terms of wealth growth.
We see it in terms of things as simple
as credit scores. Mm-Hmm .
You know, we have a lot of people that
were in those mid-tier credit scores.
Some of them certainly have moved
up over the last years, a few years.
A lot of them have moved down
and, and fewer left in the middle.
It's a very interesting phenomenon
that we're, we're seeing.
Yeah. I, I term now, since
we're a couple years past COVID,
I'm starting to use the
barbell effect, right?
And that's another term a lot of virtual
services folks use, but it's true.
You're seeing the middle kind of
disappear and you're either unfortunately
moving down or you're being able to
benefit and move up either in wealth or it
sounds also like in your
credit behavior as well.
So, Ian, you, you spoke of,
of investments, you know,
clearly being a fueling factor of, of
this, this growth that we've seen in,
in wealth over the last few years.
How has that also compared to to deposits
to CDs and other forms of, of wealth that,
that our financial institution lenders
you know, are, are looking at these days?
Yeah, if we, if we stick to just liquid
investments, so those are, I'm sorry,
liquid assets. So those are assets
that I can turn into money very easily.
So it would be a deposit account
or an investment account, right?
It's also what a financial
services marketer could try
to target and bring into
their own institution.
We've actually seen deposits remain
somewhat flat over that same time period,
that three to four year time period
and actually went down by a trillion
dollars. So it was that 15 trillion,
we estimated down to 14 trillion
as of the summer of last year.
So really all the growth
came from the investments.
And that's true across the board,
but particularly in the stock market
and that's owning stock directly.
And again, when you think
about who owns stock,
even though it's been democratized
really across different households in
the US where everyone
has more stock ownership,
we still see the majority
of stock ownership at those
higher levels of wealth.
It's also true through ETFs and
mutual funds too. So in my portfolio,
if I'm mainly investing in stocks, I'm
gonna experience some of that growth,
but it's maybe gonna be a little bit
diluted if instead if I was just directly
investing in stocks. Also,
interesting that in the last several
years we've seen bonds come back as well.
Bonds have increased in value and they've
contributed probably about probably
about a third of,
of what we've seen in the growth outside
of that majority of the stock market.
So it's definitely been investments,
but not only stocks, mainly stocks,
but we did also see those
bond levels increase as well.
Ian, we, we spoke about how this
growth in wealth has certainly not
been even, you know,
distributed evenly across all populations.
How have you seen this impact across,
say, different age tiers, you know,
retirees versus Gen Zs and,
and, and younger consumers? Has,
have there been any developing, you know,
trends that are noticeable
within those demographics?
Definitely, definitely.
And you could probably imagine that
folks who are maybe more advanced in age
have had the time to build up in
wealth, and that's always been the case,
but it's even more so the case now.
Not only the, the most recent 10,
15 years,
really the last 2030 years consumers
who were able to invest in the stock
market, even at different levels,
were able to really derive up their
overall wealth and move into those
affluent segments that
we talked about earlier.
We have a segment we call the retirees.
You could probably guess
they're at least 65 years old.
Why they comprise about a third of the us,
34% of households they own or
command 44% of all the assets.
So they are an incredibly
important segment for
financial services marketers to
capture not only today,
but one of the biggest questions in
financial services is this impending
transfer of wealth that's over the
horizon. When the retirees move on,
they're gonna leave their
wealth to their families.
They're gonna leave it at
different inheritance options.
So financial services marketers
are then trying to look at, well,
who's gonna maybe move into
wealth who aren't in wealth today?
And we see a lot of the Gen X families
spread across those wealth segments I
talked about, but they're in that age
span that in the not too distant future,
and then also maybe in a little bit
longer they're gonna inherit their wealth.
So they might not have the
largest amount of wealth today,
about 27% of assets, but
once they inherit wealth,
they're gonna really move to the
forefront of being the wealthiest segment.
You also mentioned the Gen Z segment.
They really haven't had enough
time to develop their wealth.
The investing they can do hasn't
been benefited by compounding
which is one of the most powerful laws,
right? There are some households though,
that have been able to communicate
that wealth. It's a very small number.
There are less than 400,000 households
that are in the Gen Z segment
that have at least a million dollars.
So they're very hard to find.
If you can find them, they're
fantastic customers, right?
Because the overall opportunity to
have a customer lifetime value that's
high is incredible with that household.
'cause You'll have them for 40, 50,
60 years. Right.
Right. It's interesting noticing, again,
the similarities between what we're
seeing within wealth trends and what we've
also been seeing within,
within credit trends and how
just the factor of age, you know,
is, is such a, a, a noticeable trait,
you know, when, when sort of
predicting how different, you know,
populations or households might
might have benefited or not
benefited over the last few years
using those, those age demographics as,
as an example within the credit
trends, you know, field for example,
we've seen how
within s the same income tiers as well as
the same risk tiers,
age is such a huge distinction between
how well different populations,
different households and consumers have
weathered the financial storms over the
last few years. Because of what you
mentioned earlier. You know, the,
the younger generations simply haven't
had the time to build up those assets to
let you know investments
compound over time and, and,
and have a financial rock
to fall back on when,
when times get tough.
So it's been been interesting
to see that within those
same tiers everything
else being, being similar,
just knowing that,
that someone hasn't had as much time
within their financial lives to build up
those assets can be a, a
predictor. So like you say,
if you can find those, hang onto
'em. Yeah. Grab 'em and, and,
and hold on.
Yeah. Give them your promotional rates,
give them your top tier customer service,
make sure their needs are met and
anticipate their needs as well.
Absolutely. Now, how, how about you know,
age is certainly an interesting one.
How about geography? Anything that's,
that we see on a geographic basis
on a state level or, or, you know,
a broader territory level that's
that you, you can pull out?
Yeah, definitely. If, if you do talk to
financial service marketers and you say,
well, what are your biggest markets?
Everyone's probably gonna say the big
five states California, Florida, Illinois,
New York, and Texas. And those are
still the biggest markets overall.
If you're introducing branches somewhere,
or if you're doing some new
advertising for market acquisitions,
those are still gonna be your largest
markets. But if you're looking for, well,
where are concentrations maybe of
the most affluent households or,
or households where the
median assets is higher?
It's interesting that New England starts
to actually appear more often than not.
We find that Connecticut,
Massachusetts New Hampshire and then
New Jersey and New Jersey would include
we're seeing from some wealth going
out of New York into the suburbs of New
Jersey. And then Hawaii have
the, the highest assets.
So each one of those states on their
own might not be the biggest market in
terms of volume of the
number of households,
but if you're looking to increase
your average account balances,
those are some areas you definitely wanna
make sure that you have a presence in.
Right. And then if you wanna
take it down to another level,
say let's look at some cities
and as I mentioned earlier,
we'll look at cities from
the census definition.
So what's known as the core
based statistical area or CBSA
where you're seeing the largest
affluent growth is New York,
Chicago la and then also Dallas.
We do have then maybe about four cities.
There are about the same
beyond that in terms of growth,
but growth is happening. And it might
be in some areas that you suspect,
you hear taxes getting bigger.
You hear that, you know,
the New York suburbs is where maybe some
of that Manhattan money is going to.
But I was interested to see that LA
is still in that list when at least
anecdotally people say wealth is
fleeing from California. Right?
You're not necessarily seeing that
the case in at a level that would make
a dent in California being
an attractive market.
It's just so large that it still makes
sense for any financial services marketer
to try to target consumers in that state.
Interesting. Okay. So, so then let me
put you on the spot then. You know, ah,
if we are going to then go
ahead and say, all right,
we want to target Los Angeles, we want
to target, you know, the young affluent,
we want to, you know, we
want to target something,
how does one go about doing that?
Where should marketers be focusing
their efforts on capturing, you know,
whatever targets, you know, make
sense for them to, to define?
Hmm, great question. I like to look at
it from a three-step process. First,
what is the geographic market that
presents me with the most opportunity?
And this would be true if I
have brick and mortar locations,
or even if I'm a digital bank,
because I'm still gonna wanna inform my
advertising with a different designated
marketed area or DMA that I wanna
focus that marketing on as well
as my digital and online
advertising to see which zip codes
I'm looking for when I wanna bid on an ad.
So I would start with that looking
geographically where I want to focus.
And as I mentioned, California's
a great state still to focus on.
And then further, if I wanna look
at a metropolitan area, as I said,
Los Angeles is a great area. San
Francisco still has significant wealth,
and if you include down in
the Silicon Valley area,
you've got great opportunity there.
But then what I would wanna do is
understand which households in those
geographies are really the drivers that
are pushing those numbers up and making
it a attractive market that I
wanna make sure that I can win.
And that's where we can help understand
what is a total a household's total
wealth,
and also what their deposits versus
their investment breakdown looks like.
So you can understand if this is a
household that if I've got a high yield
savings account or a CD that I
wanna offer promotional rate on,
they can not only open an
account, not only fund it,
but they can fund it with a
significant amount of money.
So I get a return on my
advertising right away.
And then the third step
though, would, would,
would be to understand what sort of
messages are going to resonate with these
households. And that's where tried
and true segmentation can help,
or what I talked about before might be
a little bit more of the quantitative,
the hard numbers of where is the
opportunity Segmentation helps with the
qualitative. Okay,
once I know I wanna advertise to
these people what's the sort of
messaging that I should focus on?
What should resonate with them?
Maybe where are they in their life stage?
So maybe their needs are
gonna be different in this
part of Los Angeles versus
another part of Los Angeles. You put
those three steps together and you,
you pretty much have the best way
that you can attack any market.
Interesting. So you're not just getting
to the identification, the, the what,
you know. Yeah. But then drilling down
very importantly into the how, like,
okay, everyone's gonna be trying
to, to hit these populations.
How do I distinguish myself?
How do I tailor my message to
what they are most receptive to?
Correct, correct. And,
and even sometimes I don't need to know
that it's the O'Neill household that I
want to target. I just know that
there are households in the,
where the O'Neill household
resides that I want to target.
So there's a big sort of back and forth
and understanding someone's identity
and resolving a message to someone's
actual identity, which is fantastic,
but it shouldn't hinder
any of your efforts.
Awesome. This has been very interesting,
and I appreciate your time.
Before I wrap up here I
do want to sort of do the,
do the proverbial 30,000 foot
question, open it up and say,
as you look out, you know, we're,
we're halfway through 20, 25. Now,
as you look out, you know,
for the rest of the year, and,
and I'll even let you go
into 2026 if you desire,
what do you see in store? You know,
are are we gonna see continued growth?
Are we,
are we expecting what we've been
seeing over the last few years to,
to continue? What do you think?
I think so with some caveats with
the new administration and that
are willing to take,
I guess you could say more bold or
more significant efforts it's difficult
to maybe chart or plot a progress
that's gonna be an even line.
We might see more dips in valleys and
mountains occurring on the deposit
side. So if you're in
banking or your credit union,
I think we're gonna see deposits
stay somewhat flat, unfortunately,
and we're still gonna have
that hunt for deposits,
which everyone has been trying to
attract more deposits over the last three
years. There is some fatigue
that's set in. Fortunately,
I think that's gonna continue for the
next year or so where you're gonna have to
offer some very attractive rates for
people to decide to change their existing
relationships and bring more deposits
over. On the investment side, though,
that has been the engine,
right? The stock market,
we did have a dip in the stock
market earlier this year,
but it's come back and
we're up year to date.
And if this sort of progress and
expectation occurs and continues to occur,
I think we'll still see growth. Maybe
not at the same level that we had before,
but we'll still see growth
in the future. However,
all bets are off if there are significant
policy changes by the existing
administration. Right.
Yeah, I'll be interested to
see, I think not just myself,
everyone is going to be interested
to see that as well as, right,
not just the answer to will there be
more growth, but where, you know, yeah.
Are we going to see a continued
spread of the, of the k,
you know, gap or, you know, will things
be a little bit more evenly distributed?
Ian, as always, it's a pleasure
talking with you and, and,
and having you share your insights.
If our listeners would like to reach
out to you, how can they find you, Ian?
Yeah, so best way to reach
out to me is through email.
My email address is ian dot wright IAN dot
W-R-I-G-H t@equifax.com. And
I'd love to hear from folks.
Awesome. Thank you again,
Ian. And to our listeners,
I hope you enjoyed today's
topic. If you have any questions,
you can certainly reach out to us,
especially if you have ideas for a
future podcast. Reach out to us at Risk
advisors@equifax.com. We look forward
to hearing from you. Thank you.