All signs seem to suggest that the economy is improving. The U.S. labor market is strong, hourly wages are up and inflation is cooling from its 2022 peak, albeit with lingering effects and at a rate slower than most consumers would probably like—and no doubt with prices remaining significantly higher than they were just a few years ago.

As a result, consumers are also growing optimistic about the state of their personal finances, according to new insights released by marketing research firm WARC. That optimism might be characterized as cautious, however, as consumers remain guarded and their improved mood hasn’t translated into increased spending.

WARC
Consumers worldwide were asked: In the next six months, how do you think your personal finances will change?

WARC’s report, which explored the economic factors influencing worldwide consumer spending behaviors, found that sentiment appears to have improved when it comes to how people feel about the state of their personal finances. More than half of North American respondents (52 percent) said they believe their personal finances will get better within the next six months, compared to 49 percent during the same period last year. A third (33 percent) think their personal finances will stay the same (compared to 35 percent last year) and 15 percent think things will get worse (compared to 17 percent in 2023).

Globally, the outlook is even more rosy: 61 percent of respondents worldwide believe their personal finances will get better within the next six months (up from 58 percent a year ago), while 28 percent think their personal finances will stay the same (compared to 29 percent in 2023) and 11 believe their personal finances will get worse (compared to 13 percent last year).

Younger consumers also appear especially optimistic: More than two-thirds of Gen Z (68 percent) and Millennials (65 percent) globally anticipate their financial situations will turn around in the next haft-year, with Gen Z more positive about their finances today than they were in pre-pandemic 2019. Baby Boomers around the world, meanwhile, remain markedly more guarded (29 percent). In North America, it’s the same story: 64 percent of American Gen Zers believe an improvement in their finances is around the corner, compared to 59 percent of Millennials, 44 percent of Gen X and 29 percent of Baby Boomers.

As a result of this growing optimism, some of the defensive spending habits that characterized the COVID years appear to be fading, even if that shift can be characterized as gradual. Consumer spending on discretionary purchases has ticked above the pandemic years, but consumers remain price-sensitive and spending has yet to return to pre-pandemic levels. For example, 27 percent of global respondents reported going on a domestic vacation in 2023 (in the U.S. that number was higher, at 29 percent), 19 percent reported purchasing a plane ticket and 12 percent reported going on a vacation abroad, all big improvements from the pandemic years but still not back to discretionary spending seen in pre-COVID 2019 or 2018.

And while sales and special promotions remain enticing to consumers, the report found that consumers’ use of cost-cutting behaviors such as coupons and vouchers appears to be in decline, with the number of those who said they recently used coupons or vouchers sliding four percentage points from the beginning of the year alone (50 percent to 46 percent).

WARC’s “2024 Consumer Trends Report” was based on survey data provided by audience research company GWI, and also included WARC’s research, case studies and analysis.