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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,
where we break down the latest economic
and credit insights to help you navigate
today's business landscape.
Hello, and welcome to
our Market Pulse webcast,
where today we are going to be talking
about the state of consumer wealth and
the overall condition of the US
consumer in general. But first,
let's have an overview of the economic
condition within the United States by
Justin Begley of Moody's. Justin?
The US economy continues to weather
a string of significant shocks.
In just the past year, the economy
has grappled with broad-based tariffs,
restrictive immigration policies,
and a global energy price
shock from the war in Iran.
But the economy's resilience
appears tenuous and it
wouldn't take much for it to
falter. For the economy to grow,
consumers need to do their part
and maintain their spending.
And they are at least in the aggregate.
Real consumer spending grew just over 2%
last year and has continued to grow at
a similar pace in 2026.
Nominal retail sales
growth cooled in June,
rising just 0.2% after advancing
an average 1.1% over the previous
four months. Much of the deceleration
though was due to lower gas prices.
And if we exclude gas stations,
sales rose a healthy 0.7% on the month,
and the breadth of the strength in core
sales suggests that households used some
of the relief at the pump
to buy other goods. Now,
the decline in energy prices stemming
from the temporary ceasefire agreement
between the US and Iran resulted
in meaningful inflation relief in
June. The Consumer Price
Index fell 0.4% on the month,
lowering the year-over-year
inflation rate from 4.2% in May to
3.5%. However,
hostilities between the two nations
have escalated over the past few weeks,
causing oil prices to
rebound above $80 per barrel.
This is well below
April's peak, near $120,
but suggests that high energy
costs will once again put strain on
household budgets in July and in
the coming months if sustained.
And this will negatively
affect the consumer outlook.
The level of anxiety among
consumers is already unprecedented,
even in the deepest of past recessions.
Consumers are still recovering from
the post-pandemic inflation surge and
are generally discontented
with the higher price level.
Tariffs have exacerbated cost of living
concerns and the recent jump in gas
prices has further
squeezed household budgets.
And the labor market is also wobbly
as demand for workers is soft and real
disposable incomes are virtually
unchanged from the past year. Meanwhile,
credit stress is rising among the most
financially vulnerable subprime cohorts,
and there is risk that performance
deterioration could become systemic if the
labor market weakens further. For now,
Moody's Analytics expects that
the consumer will continue
to support the economy
through the rest of 2026,
but downside risks abound.
Thank you, Justin. Today,
we're going to be addressing a topic that
many of you have been telling us is of
high importance to you, and that is
the state of the US consumer overall.
And what is the,
the impact of consumer wealth on that
condition and their ability to handle
affordability as prices
continue to, to rise?
I'm joined today by our IXI chief
strategy officer, Ian Wright,
who's going to help us unpack
some of these, these details,
and we'll dive into how
different populations are
being impacted by the economic
conditions in different ways.
So Ian, thanks for joining us.
Thanks, Tom. Happy to be here and
looking forward to our conversation.
So one of the ways that we're going
to frame this conversation is sort of
setting the stage by talking about
how different populations are
defined, you know, before we even
start going into how they are, ,
how they are impacted by rising prices
and other economic conditions that we're
seeing today. So it, we all know that,
that it's not a blanket, you know,
condition that, that all people are
affected, you know, equally by rising,
, daily necessity prices like
utilities, food, rent, and so forth.
But rather than infer, ,
these, these, , issues,
we want to actually put some
quantifications, put some some
definition around these.
So we're going to be referencing
things like the K-shaped economy to
illustrate how some people are actually
thriving in these conditions and others
are struggling and what's
happening to the people in between.
And we're also going to be talking
about the impact of wealth and,
and other consumer finance
elements on those trajectories
that different populations are, are
going. So to start us off though,
we thought it would be useful to have
a brief overview of what the overall
conditions are like. And,
and I'll ask Ian to give a state of
what he's seeing in terms of the overall
wealth of the US population.
And I'll follow up with some
insights around the credit. So Ian,
if you could take a stab at,
at giving an overview of,
of what the wealth conditions
are like out there.
Sure. I'd be happy to. And, and from
a top level, high level, you know,
across the national story,
it's been a great story actually
since the Great Recession.
So about the last 18 years or so,
we've seen consumer wealth really
skyrocket with a little bit of a,
a hockey stick growth, especially since
COVID. So if we look at post - COVID,
let's say, 2021 we've seen
consumer wealth grow by about 20%.
Oh. I should mention when we're
discussing consumer wealth,
the way we defined it is liquid assets.
So the deposits that you have in the bank
and your investments that you can move
between institutions.
So those that you control
joint accounts IRA accounts,
but not your workplace savings that are,
are locked up and associated
really with your employer.
So it's that liquid wealth that consumers
can bring to bear to pay for their
necessities of life and also for
their discretionary purposes and use
themselves to plan for the
future. And with that 20% growth,
our last figure has consumer
wealth at $74 trillion.
With the last year that we've got data
for the growth being about $8 trillion.
So again, at a very high level,
it's been a fantastic story.
But I think as we'll see when we walk
through some of the numbers and break them
down in the populations, you'll see, ,
not everyone has been able to take
advantage of that growth. Yeah.
One of the metrics that shows that,
we looked at wealth in 2021 versus 2025,
we wanted to see what the typical
consumer had in wealth. You know,
how are they doing overall for that
mythical kind of middle... Well,
it's not mythical, it is the
middle households in the US.
And we use medians instead of averages
because ultra-high net worth households
can really skew some results. We did that.
We looked at the median household
wealth in 21. We compared it to 2025.
It was $75,000, which is,
you know, fairly good number,
but it actually went down by 1%.
So if we had that 20% increase in that
time period, why did the median go down?
Well,
I think we'll see it's because we didn't
see a significant number of households
be able to take advantage of that growth.
Yeah. And,
and you hit upon a number of really key
things that we're going to go deeper
into during the course of
this, this podcast here,
that difference between just
something as easy as average versus, ,
versus median and, and how they,
they tell different stories because of
what's happening underneath those top
level numbers. And we'll
certainly dive into those. From a,
a credit standpoint, you know, we've,
we've also been seeing a rather
encouraging story, again,
at that top level that you
referenced. So when we look at those,
those high level numbers, we look
at things like delinquencies,
auto delinquencies, card delinquencies,
personal loan delinquencies.
Those have actually been very stable and
in some cases even declining overall,
you know, for the past couple years now.
Certainly when we entered the
pandemic period several years back,
conditions dictated that,
that delinquencies sort of became
artificially low. You know,
we were all staying indoors, you know,
we weren't spending to the same
degree that we were before. ,
And we were getting stimulus
checks. And, and there were other,
other conditions that
helped many of us not only
help, you know, pay down some of
that, that higher interest debt,
but also build up savings and build
up some of the wealth that you've been
seeing accumulate over
the last several years.
And we knew that that wasn't sustainable.
At least we were hoping it would,
it wasn't sustainable because we were
hoping to come out of the pandemic and
resume life as usual. And, and to
a degree, that's what happened.
So it wasn't a surprise when
we started to see credit
card and auto delinquencies start to
rise and some of the other, you know,
lending categories start to rise as well.
The question was how fast and
how far are they going to rise?
How much reliance upon debt are
people going to be coming back
to? And that's where we've been seeing a
number of the interesting stories. Yes,
delinquencies did come back to
pre-pandemic levels and in most
cases actually exceeded it a little
bit. But like I said, they've,
they've largely been stable.
Mortgage has started to really pick up
lately and we're keeping an eye on that.
But overall, the delinquency
story is rather solid.
But we start to look at other things
like the rise in consumer debt.
And there we see not just
a rise in total debt,
but also particularly the
rise in revolving debt.
People utilizing their,
their cards for larger and larger
portions of their overall spending
capacity.
And that's certainly related to the
higher prices and what's come about with
inflation and, and whatnot.
But like everything else we're talking
about, it's not a blanket statement.
We don't see the same patterns happening
across different populations in the
same way. So again, we will
dive into that a bit more.
And one of the ways that we will dive
into it is, is by referencing, you know,
what many of you have probably already
heard quite a bit about, and that's the,
the K-shaped economy. And
as I've often mentioned,
there, there is no magic to the K.
It is not a complicated definition.
It simply a very useful visual
illustration of what we're seeing
in the data,
that there are populations
that given the conditions of a
rising stock market, you know,
increased property values
for homeowners higher incomes
for many portions of the population,
we're seeing people
that have been thriving,
that whose financial wealth and financial
status has been increasing over the
last several years and continues to
increase. And at the same time, of course,
we have people that are falling. We,
we see people that are struggling
with higher higher prices,
trying to make monthly ends meet, having
to rely more upon credit to, to do so,
and,
and ultimately having to start making
choices about what bills can they afford
to pay this month and what, what
do they have to let slide. So,
so the K is basically just that. It's,
it's referencing the fact that people
are thriving and people are struggling,
which is not a new phenomenon.
It's always been the case.
The reason that it's so
prominent now is that we see that
both of those sides of the K
are growing simultaneously.
We have more people growing in their
financial lives, and at the same time,
we have more people struggling,
which obviously means that the people
in that middle, the mythical middle,
Ian called them,
they are shrinking. That
population is, is shrinking.
And that's, that's important because
that's the middle class. That's,
that's the... Those are where the averages
that we've been talking about live.
And those, those high
level average numbers are
describing less and less of the
population.
And even the populations that those
numbers are describing right now
doesn't tell where they're heading. It's,
it's simply saying what they are right
now and, and, and things are going, yeah,
in different directions.
So, so Ian, let me,
let me toss out a question to you.
I've been talking about, you know,
the difference of averages and you
mentioned, you know, differences
between average and median.
Could you sort of go into some of the
explanation of, of what we mean by that,
that illusion of average and, and
what you're seeing on the wealth side?
When we're talking about wealth,
which is just one component of the
sort of series of financial levers
or pressures that people have when they
look at their overall financial being,
and you touched on, on really
the breadth of them. In wealth,
we see that it's a very sharp
picture of who has the ability to
increase in wealth and who has actually
the pressures on them that they don't
have that luxury to put money
aside to be able to do that.
And that really does
affect that middle section.
Although I'll get to a little bit where
we did see a bit of a buffering of that
middle in the last year. And
what we're seeing is not only
a sharpness in the curve,
you're looking at the households in terms
of which households are on either end
of the K, and you might think, "Gosh,
that angle of that K is getting a lot
sharper. It's kind of breaking out.
" I would like to also always
look at a second sort of
metric associated with that, which
is for us in wealth, the assets.
And so how thick is that line?
So we are seeing the, you know,
the households shift and, and separate,
but are we also seeing the assets get
more heavily weighted on one end or the
other?
And, and on that, we're talking
about the K and, and we're...
Historically, a lot of folks
have referenced it, you know,
from an inferring standpoint. You
know, we infer that some people are,
are struggling.
We infer that some people are thriving
because we look at a single dimension,
income, assets, credit score, things
like that. What might be helpful is,
is to sort of set the
table by saying, you know,
we have the ability to look holistically,
you know across these
households, these consumers, ,
through the Market Pulse Index,
which is a measure that looks
across household wealth, income,
credit, durability, all of these
different - Yeah. You know,
financial components, and creates
an index score of one to 100.
So when we're talking about the thrivers,
the people that, that have
a, a growing financial life,
we're talking about consumers
that have an index value of
80 or greater. Conversely,
if we're talking about the,
the strugglers who we are
referencing in, in that case are,
are populations whose index
values are below 50. Mm-Hmm.
So that 50 to 79 range is that,
is the middle tier that's,
that we're focused
so much on that is both shrinking
as well as continuing to move
up and down. Some of those are
moving up and joining the thrivers.
Some of them are moving down and
joining the strugglers, creating this,
this bifurcated trajectory
here. So that's,
that's what we're talking about.
And, and yeah, I like what,
what you were saying about the averages.
There was an analogy that I
had heard a long time ago and,
and had forgotten about it.
And then it came up recently in a
conversation and I really liked it.
I'm going to use it, yep,
many times in the coming months.
And that is the man in
the oven. If you have a
guy in a kitchen whose head
is in the oven and whose
feet are in the freezer, his average
body temperature is, is perfectly normal.
That's right. Yeah.
But that's not telling the story of what's
going on with that individual. Yeah.
And, and I think that's a very useful
visceral illustration of
what we're seeing to a degree in
the data. And it's why, you know,
to your comment very early on in
this podcast when you said, you know,
we look at median because that's,
we see that shrinking even as total
wealth and average wealth is increasing,
the median is going down. That's
obviously telling the story.
There's more of those consumers with
their feet in the freezer that -
Correct. Yeah. That are experiencing
a draw down on their wealth, you know,
even if overall wealth is increasing.
Yeah. I like that. I'm gonna
steal that one, man. In the oven.
You go right ahead.
Now that we've sort of established
what we mean by the K, and,
and that we are in fact seeing
that, you know, within the,
the data that we're
looking at, what are some,
some either obvious or
less obvious long-term
impacts of this K,
of these trajectories that different
populations are taking? I mean at
the end of the day, why
does it matter that,
that we're seeing this split
across different consumer groups?
You could look at it in several
different ways. You know,
I have heard lately that we might
be entering a new gilded age.
And if you're a history buff,
you can kind of remember that the previous
gilded age that the - US went through
didn't end very well.
And so when you see significant
populations that don't have the economic
resources,
or maybe some of the levers
to raise themselves up that
they previously had it's
really going to disrupt the economy,
not only in financial institutions,
but we will see disruption
there. I think one of maybe the,
the hidden impacts of what's going to
happen in financial institutions is you're
going to see a reduction in the
number of banks, for instance.
We've got about 9,000 credit unions
and banks and neobanks together. Now,
there are other competitive
pressures that they are faced with,
especially kind of your more
traditional brick and mortar banks.
But as we see a concentration
of the population who can
provide banks and credit unions
with the deposits that they
need to offset their loan balances
to then also be profitable,
a shrinking population at the top
of the K, right now it's, you know,
about 10% of the US
households hold about 72.
You could think about 10%
hold about three quarters.
You're gonna have so many institutions
that are going to be able to engage
those, , households. And the
bottom as it grows, you know,
it's already half the households,
about 54% don't have over $100,000.
And their assets have been
shrinking in the last four years.
We've seen them decline by
about, I don't know, 17, 18%.
The number of financial institutions
that are going to be able to serve that
mass market,
it's gonna get a lot smaller because
they're just not gonna be able to be
profitable.
There's going to be many more consumer
households that need those services,
but there's not going to be as many
financial institutions that can remain
solvent, , and be able to
support that part of the market.
So you can see this increased
competition and a reduction, really a,
a reduction in those
financial institutions. ,
You're only going to see it there
though. You can also see it, you know,
in different parts of
the economy. , W - in,
in ways maybe that we didn't expect.
If you're familiar with Delta Airlines,
the way they're reacting to, ,
the K shape is not by maybe
increasing the number of seats in the
airplanes that have economy seats.
They're going the opposite direction
because travel is discretionary.
So they're seeing that people who have
money are traveling more and they're
increasing their premium
footprint in their airplanes.
But if you go to sort of the
consumer durables, you know, the,
the things that people buy
every day that are mass market,
you see the premium branch having
to start actually discount. ,
I just read that PepsiCo would
reduce the, the price of their chips,
for instance, so they can start
competing against generics.
So you're going to see these ripple
effects across the economy, ,
where people who don't have enough
money to afford what was maybe be an
affordable luxury in the past when times
were tough are going to have to start
turning to focusing on really just paying
for those non-discretionary items and
having very, very little
discretionary, , spend.
But you're also going to see more
creative services come up. I,
I think we're probably all
familiar with buy now, pay later. ,
We're starting to see a, a new
term, FNPL, or fly now, pay later.
Or people will say, "Hey,
I've gotta take a vacation." They're
putting it on cars. They're financing,
you know, these sort of
discretionary trips and,
and expenses that they previously would
save for, your old Christmas club. ,
They just don't have the
resources to do that anymore. ,
So they have to put more
of their money onto credit,
which is going to change the nature of
that cycle when the first comment I made
about what's going on with banks
and credit unions. If you put,
have more consumer debt,
more consumer credit,
you're going to have to
have higher deposits.
And if those aren't available
in certain populations,
then you're going to have new players
come in to try to service that in more
creative ways. So that's what we're
seeing kind of in the general area.
I'm sure you're seeing the same in
credit and lending or, or something.
Similar. Yeah. I was
just going to say, you,
you bring up some fascinating
examples in sort of the retail and,
and broader commercial space. Yeah.
And I was going to mention that we
do see very similar patterns within
the FI industry. , Well, the
financial indus - , within FI. ,
And, and I liked the, the
delta, you know, example that,
that you provided because it's
so easy for most of us when
we think of the K, we get drawn
to the lower part of the K.
, For a good reason. I mean, it's
totally understandable. Tha's,
that's where the struggle is,
that's where risk is. , That's,
that's where narrower
margins are. Right. , But,
but it's important for us to not lose
sight of the other part of the K.
It's smaller, but it's, it's,
it, it's important. And,
and I think with financial
institutions, it's,
it is important to understand, okay,
who is more likely to be struggling
and, and becoming, you know,
under more financial
stress? We want to - Yeah.
Be able to proactively work with that
and, and manage that as best we can.
But there is also that other side
of the K, and who is growing?
Who has the, the money
to, to grow deposits?
Who has the money to invest
to, to grow assets and, and,
and have the financial activity that,
that's many of our institutions are,
are focused on, on trying to grow? , So I,
I love that example because it's, it's,
it's ill- illustrative of needing
to keep both sides of the, ,
of the K in mind. You
also said, , one thing, ,
that, that I wanted to pick at a
little bit as well in, in the growing,
the growing population that
has assets under $100,000.
Yeah. , You call the mass market, you
know, population we call it. Yeah.
I think that's, that's important because
what we have seen on the credit side,
on the overall financial health side,
when we look at the market pulse
index for those populations,
that is the one
distinguishing metric
above all others that
can predict, you know, who is
going to have a tougher time in,
in the future - Right. And who is going
to thrive, you know, moving forward.
Yeah. And when you think about it,
it makes sense because for those,
those households,
those consumers who don't have those
liquid assets that you mentioned to draw
upon as prices get higher,
when emergencies come around,
that's, they're going to struggle. Yeah,
they won't have those
assets to fall back on. ,
They are going to slide down. And in fact,
when we looked at the population over
the last year and a half that went from
the middle tier down into the bottom
tier, the strugglers, the strivers,
99% of them fell in that
mass market population.
They had under $100,000 - Yeah. , In,
in liquid assets that they
could draw upon. Conversely,
of those po - of the population that
moved from that middle class up into the
strivers that grew over the last
year and a half, not shockingly,
they had over $100,000.
Yeah. And, and of course,
this doesn't negate the fact that, you
know, every situation is different and,
and it doesn't mean that if you have
less than $100,000, you're doomed to,
to fall down. But that pattern is
very distinctive, you know, that...
And, and the reality dictates
that that's the, the case,
that as prices rise, if you
are dealt with an emergency,
you know, , expense or even a
planned expense - That's right.
You're going to have a tougher time
meeting that and certainly a much
tougher time in growing
your overall wealth and,
and assets and financial status, you
know, given what you're starting with.
And that's why we particularly see that
exasperated in the younger generations
who haven't had the time to build up
that nest egg, so to speak, those assets.
Definitely true. So that might be a,
a good transition to start, you know,
talk about, , some of those younger
generations and, and what we see.
I, I do want to talk about the wealth
transfer that's coming up .
That because it - , that little event
if that's on the horizon? Yeah. We've.
Heard that loud and clear that,
that there's a lot of interest
in knowing about that. Yeah.
But before we do that, let me, let
me maybe set the stage a little bit.
And let's talk about some of those younger
generations, Gen Z in particular. ,
What are you seeing in terms of Gen Z?
How are they different from previous
generations? And, and, and what,
what makes them worthy of our attention?
Why are they valuable
customers at this point?
Yeah, those young kids, right?
They're always kids.
It seems like every generation,
they're, they're different. I,
I do think that there is a little bit
of a different situation with the Gen Z
than maybe we saw in the millennials or,
or previous generations
where they were younger.
A- and a lot of it is because they're
have been grown up in a frictionless sort
of experience. , Whether it's
their kind of consumer behavior,
, of the Amazon experience or the
Grubhub experience of when they,
they want something, they can
get it. Doesnt mean they're lazy,
but they're able to control a lot more
of their lives on the schedule that they
want.
I call it an happy life versus a happy
life because it's - Okay. You.
Could borrow my, , my man in the oven.
, I'm gonna borrow happy life. That's.
Good. Deal. Deal.
And that's not always happy because of
the fear of missing out for all those
sort of, sort of other
presures. But they also, ,
have the ability to switch their
financial relationships much easier than
previous generations.
I can walk into a bank or I can go
online and open up an account and within
minutes, have that account established.
Within several more minutes,
I can transfer funds in between accounts
so I can leave you behind if I don't
like the experience that you've just
given me and go to a new player.
They have also grown up not
following their parents into
the local branch always where, you
know, the traditional pattern would be,
you know,
I would follow my parents into the
local bank branch and I would open my
checking account there and that's what
start me on my financial journey and
establish my relationship with firm
with options like Chime out there and
others that kind of started as spending
cards that you would create a
relationship as a teen with. And now,
guess who's opening up checking accounts
that have already then anchored my
relationship with you on, on my card?
They have many more options than
others had in the past and the
ability to shift their relationships
when they want. You know,
we also hear that they're more
values-based, the ESP investing,
those sorts of things.
I don't know if that's so different
than previous generations. For instance,
when I came out of college
I'm going to date myself here.
I worked in socially responsible
investing when, you know,
apartheid was still in South Africa.
We were tracking who was you know,
active in South Africa and screening
stocks for those issues and others.
So I think that's always been there,
especially with younger generations.
But so we've got this sort of ability
for them to decide on their own
much more frequently and with a lot
more power how they wanna control their
financial life. What makes
them valuable is they're young.
They can be a customer for 50 to 70 years.
So if you treat them right and you
establish that relationship and maybe
for that formative relationship
years for when they're below 30,
you do have that sort of go -
to-market presence that they wanna
be associated with because they're,
another term here you might wanna use,
they live a FinTech life.
They're also not going to the traditional
sources of information for financial
advice. , They're leveraging
the tools that are out there,
like on TikTok and other
areas then to guide them.
I'd say at least until they get money.
Always have this though that once
you get over a certain level,
whether it's a million dollars
or maybe some other level,
I think everyone takes a
little pause and say, "Well,
maybe I should actually consider, ,
some more traditional or brick and mortar
solutions where I feel a little more
confident that they're going to do that.".
Something, something outside of TikTok
for - Yeah. My financial advice.
That's right. That's right. Well... You
know, it's going to be there tomorrow.
.
Let's talk about that wealth. Yeah,
because a lot of folks are looking at
Gen Z as well as millennials, obviously,
when we are discussing what's,
what's being termed as the
great wealth transfer. And
on the one hand,
I hear why people are interested.
And on the other hand,
I'm thinking, well,
how is this different from any other
generation passing the wealth that they
accumulated to their offspring -
Yeah. To the younger generations?
What's making this so,
so fascinating and so much of a focus for
so many people as opposed to any other
period in human history?
I say the principle and the driving
factor is the dollar amount,
especially as the stock market, you
know, continues to perform, you know,
the early sort of numbers you'd hear
about this great wealth transfer where the
baby boomers and the silent generation
that are also a significant part of the
population also hold more
than half the wealth and early
estimates I would hear were like, "Hey,
$70 trillion is going to transfer." And
that would've been the largest sort of
transfer in history. So even though we
talk about the concentration of wealth,
it's actually been democratized
to those who can invest in
the stock market, mm-hmm.
Which has been a larger
group than, than in the past.
It's not just kind of the land of gentry
pass it down to the land of gentry
because if you could hold stock,
you kind of moved up then economically
or been able to leverage your home value
to invest in stock and,
and do some othersort of
wealth growth exercises.
But it's really that amount to the point
now I've heard estimates of it being
125 to $130 trillion.
So it's this amazing amount of
money that is going to transfer as,
you know,the baby boomers and,
and the silent generation pass on.
And then you do have some of those new
characteristics that we just talked about
with the Gen Z. However, I see
that sort of as the second wave.
There's a lot of talk about the
Gen Z inheriting this wealth.
The first wave of inheritors are really
going to be the Gen X and maybe some of
some of your older millennials.
They are the direct children ofthe
silent generationand some of those
baby Boomers.
So it's not that a wave is
coming, it's the size of the wave.
That's, that's - Yeah.
Worthy. Just a wave that's never
been seen in the past. Yeah.
Yeah. Now, do you think, and
you mentioned that, you know,
the democratization of the, of the wealth,
and we see that maybe unintuitively
at the same time that we're
seeing this widening gap, that yes,
more people have access to wealth.
But at the same time, we're seeing,
you know, more people that are,
that are struggling at the same
time. And I look ahead at the,
the great wealth transfer and I
wonder how much that's going to
exasperate that,
that split between the
haves and the have - nots
in the younger generations where we
already see it more exasperated than,
than in the older generations. There's
more variability when we look at the,
the overall financial health
layout of those younger
generations than we do the boomers
and the silent generations and,
and the retired, you know,
generations, essentially.
And I wonder how much of that transfer
when it happens is going to
exasperate that even further. One
of the things that we're
already starting to see,
and this is potentially just inferment
on my part when I'm, I'm looking at it,
but when we do see some of the Gen Zs and,
and the millennials that are
in the upper part of the K,
certainly a good chunk of them are
because they've come out of college,
they're going into high-paying
jobs. Yeah, they're,
they're taking out their first mortgages,
they're handling their credit
responsibility responsibly.
They're off to a great start in their
financial lives. But there is also
a
presence of proximity to
wealth that many of them have,
and that's harder to measure.
So they're still able to live
with their folks, you know,
that's perfectly understandable as
they're paying off student loan debts and
other things.
Or they live in the same neighborhors as
maybe there's a higher concentration of
wealth.
And so there is already that split
between, you know,
the upper and lower parts of the
K within the lower generations.
Any thoughts in terms of
how the wealth transfer may,
may impact that or exasperate it?
Yeah, and I think you've, you kind of
touched on this. I think the first wave,
so going to the Gen Xers,
I don't think that's going to help kind
of flatten out the K and disperse wealth
further significantly in the economy.
Because also a lot of the Gen Xers who
have been able to accumulate wealth have
done so, again, if they've been
able to invest in the stock market.
So I think you're going to see sort of
wealthy parents passing on their wealth
to wealthy children in general. You
know, there's always exceptions, right?
But I don't think it's going to be able
to help kind of lessen the angles of
those K shapes that we're seeing, that
either the, the upper or the lower line.
I think the bigger question is really
what's going to happen when it goes down
to the younger millennials and
the Gen Z who, you're right,
today don't have significant wealth
and it's highly concentrated if you're
trying to find who has let's say
$250,000 already and is a Gen Z
or there's probably less
than a million of them.
I can't remember the number
off the top of my head.
But do those households,
do those consumers have the ability
to accumulate wealth as those previous
generations did?
And I think what we're seeing in really
this K-shaped economy is to do so,
they're gonna have to have
jobs that are high paying.
They're going to have to have really the
ability at some point to be able to buy
a house and then start using that equity
in their house to grow their wealth.
And we're seeing significant pressures
that are working against that occurring.
And then when we also look at the job
market, we've seen some disruption, but,
you know, what's going to happen with
AI in the job market in the next,
let's say, three to eight years is that's
going to also start to impact them.
So will this generation have on their
own the ability to increase wealth?
So maybe when they inherit some of
that wealth at a second level in
this transfer, will it be a
significant amount of money then?
And then will they have the
base that the parents and their,
their grandparents had to then
be in that wealthy segment?
So I think it's really in that second
tier where we start to see the Gen Zs in
here at the wealth,
though we might start to
see some flattening because
of these other pressures, ,
that are occurring in the
economy in society in general.
But the biggest linchpin on will the
stock market continue to perform? Right.
If it does, if it stays on fire, if we
don't hit this AI bubble that people,
you know, are,
are seeing on the horizon and it stays
on the horizon and hopefully it does then
yeah, if what we see today grows
by 10% next year and 15 or 18%
year after year after year,
then we will see more of that
wealth transfer go down, ,
generationally and the K-shape
continue to occur with the same
sort of lineage, if you wanna use
that term at least the top end.
And maybe some folks, as you said,
can pull up from the bottom end,
but there are gonna be these societal
pressures on their ability to do so. Yeah.
Oh, those are big ifs.
Yeah. That's what we're
talking about, aren't we?
Yeah. So let's in
the couple minutes that we've got,
you know, remaining here, let's turn
it a little more tactical. We're talking
about what we're seeing, you know,
all of these different things that
we're seeing in terms of different
populations and you know, glimpses
into possibilities in the future.
What can FIs do to
prepare for any of this,
you know, given the, given the
current state and, you know, the,
the big ifs that we talked
about, you know,
in terms of what the future
may bring? How does, how does,
how do all of the changes that we're
talking about impact how financial
institutions look at Gen
Z and millennials and,
and the broader US consumer base?
Yeah,
so some of the ways that they can kind
of prepare themselves for this great
wealth transfer and start putting
themselves in a position for success is to
really start now,
start to create relationships
not only with, you know, your,
your baby boomer and your
silent generation customers,
but also the people around them. Now,
you wanna do this in a non-creepy way,
you wanna do it in a way that
provides value to them. For instance,
if they are a caretaker of that silent
generation or baby boomer parent
have a caretaker tool, a package,
a platform that enables them
to help manage the money
of their mother or father,
give them the ability to do
so kind of in an easy way,
give them the triggers
and the warnings when,
when things happen that they
wanna be alerted about. Basically,
give them a reason to have a relationship
with you now that provides them with a
benefit even though it's indirect.
And you can also then kinda look at the
other side of that coin for that direct
account holder who maybe
has a premium tier with you,
a platinum level of service,
you enable that person to,
to gift it to their
family members. So again,
that family member sees value in creating
a relationship with you now before
that money transfers and, you
know, numbers are 70, 75% of,
of those account transitions might also
include an sorry those transfers of
wealth might include an account transfer
from, away from that institution.
So give them value now, create
that relationship with them now, ,
start treating them as your customers
now so then when the money does
transfer,
they already have sort of that
positive thoughts about you,
they already have a relationship with
you. They're more likely than to keep that
money with you. You can also do
things like add, you know, PFM tools,
personal financial management
tools for them to leverage.
So a number of ways that you can establish
that relationship with them today.
So some of those consumers that may not
have high present values may have.That's
right. You know, exceedingly
high lifetime values,
and that needs to be
accounted for when you're.
When you're... Yeah. And,
and it's gonna be difficult.
It's going to be seen as a cost because
there might not be significant benefit
today, but you're really trying to invest
in the future, , that future state of,
of having that positive relationship.
And then for some of the other
items we talked about, you know,
get out on TikTok, which
just about everybody is,
but get out into the social
media, get out into even Reddit,
because that's where search engines,
you know, using AI are using,
and start providing advice to those
caregivers. How do you help your parents?
Give them educational materials. Give
them pathways to be able to be able to
make a difficult process and
maybe a difficult time of their
relationship with their lives
with their parents easier they
don't feel the friction
of having to handle the,
the financial life of their parent,
but it's actually something that you've
made an experience that has been very
beneficial for them.
It's not an easy A plus B equals
C sort of engagement there.
I'm.
Going to go completely into my grumpy
old man on the porch yelling at the kids
to get off his long, , yeah, persona,
which is not a stretch for me.
But I have never been on TikTok.
So the, just the thought of, like,
being out there offering financial
advice. Yeah. I'm like, really? .
That's - Yeah, that's the
number one channel, definitely.
It's a world I need to familiarize
myself more with. All right.
Last question before we wrap up.
We've talked a bunch about, you know,
how different populations
are being impacted. We've
talked about populations in terms
of age, in terms of wealth tiers. ,
We've talked about them
in terms of overall
financial status or
financial well- wellbeing.
How about.
Regional? How about geographic
differences? When we pull back and,
and we're talking about, you know,
the US averages, for instance,
there's obviously
differences between different
locations within the US. Yeah.
Is there anything that you're seeing
in terms of wealth movement or, you
know, volatility across
different regions that
institutions should know about?
I think we're starting to see some
significant changes. If you look at,
you know, which states provide the
largest markets overall for assets,
it's still what people refer to as
the big five of California, Florida,
you know, Illinois, New York, and
Texas. Those are still the big five.
And if you wanna look
at median levels too,
it's been traditionally the Northeast
and it still is the Northeast with,
with also Hawaii included.
But if you break it down a level
and start to look at, well,
where are we seeing growth in maybe
the affluent populations or growth in
households that have at
least $100,000 in deposits?
We are starting to see
some shifts. You know,
when I look at some of those lists,
and I previously saw New York
very high New York as a city,
I don't see on those lists as high. Now,
does that mean all the money's
moving to Florida? Maybe,
but also some of the move,
money might be moving to Northeastern
Pennsylvania and, and Northern Jersey.
We also don't see Los
Angeles as high on that list,
and San Francisco as high on that list.
So we are starting to
see some of those shifts.
The areas that we see some of that
growth are really in the Southeast,
and there's intense competition among
banks to move to the Southeast and you
create that brick and mortar presence
for when I'm driving by and I understand,
okay, I've moved to this
market, you're in this market.
One of the developments I wanna keep
track of though over the next, let's say,
three to six years,
is to see if the presence of neobanks
that only have a digital landline
presence, or the need to have
brick and mortar locally.
If that becomes less of an issue
on the deposit side then what it
has been on the investment side,
which is if my broker's making money
for me and I move across the country,
I'm not going to change that relationship.
I might keep it with my broker
because he's making money with me.
If I'm happy with my bank
account and I've got a, you know,
relationship banking experience with
them where I've got my card there,
I need a reason then to shift it.
And maybe the reasons haven't been as
strong now as they were in the past
because so much can be done online.
So that's a development I wanna see if
that really occurs as wealth moves and
the account holder moves to
the institution that they
still have a relationship
change. Interesting. I'll have to see
if that, that does happen. But yes,
we are seeing this population.
Shifts. And that's significant.
Something very valuable for our listeners
to understand, not just, you know,
what is happening, but, but
where. So thank you for that.
That's all the time that
we have for today. ,
Thank you very much for listening in.
If you have any further questions or have
any other topics that you'd love us to
discuss in, in upcoming podcasts,
feel free to reach out to
us at advisors@equifax.com.
Ian, thank you so much
for joining me today.
This has been a delightful conversation
and hope to do more of it soon.
Yeah. Thanks, Tom. I
always enjoy it anytime.
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