H&R Block’s 2024 Outlook on American Life Data Shows Rise in Consumer Debt Amidst Increased Holiday Spending

Rhea-AI Summary

H&R Block's 2024 Outlook on American Life report reveals a complex financial landscape where 66% of Americans feel optimistic about income growth and financial stability, while simultaneously facing significant debt challenges. The report highlights that nearly 1 in 2 Americans holds credit card debt, with Gen X carrying the highest burden at 55%, followed by Millennials (49%), Boomers (47%), and Gen Z (39%).

Despite financial pressures, holiday spending has increased, with higher-than-expected Black Friday and Cyber Monday sales. Notably, one-third of respondents reported spending more than they earned in the last 12 months, and 1 in 5 Americans couldn't cover household expenses for a week without income. The study also found that 1 in 6 Americans hold student debt, with over a third reporting unmanageable debt levels.

Positive

• Strong consumer spending during Black Friday and Cyber Monday
• 66% of Americans report optimism about income growth and financial stability

Negative

• Nearly 50% of Americans hold credit card debt
• One-third of respondents spending more than they earn
• 20% of Americans lack one week of emergency expenses coverage
• Two-thirds of credit card holders report unmanageable debt levels

Insights

Financial Analyst

The rising consumer debt trend revealed in H&R Block's report presents significant concerns for the financial services sector. With 66% of Americans feeling optimistic despite mounting debt levels, there's a dangerous disconnect between sentiment and financial reality. The generational breakdown shows Gen X carrying the highest credit card debt at 55%, while Gen Z's lower 39% debt level but higher financial stress signals potential future market instability. The fact that one-third of respondents are spending beyond their means, coupled with 20% unable to cover a week's expenses, suggests a brewing crisis that could impact consumer discretionary spending and financial services stocks. For HRB, this environment could drive increased demand for tax and financial advisory services as consumers seek help managing their deteriorating financial positions.

Market Research Analyst

The contrast between increased holiday spending and rising debt levels reveals a critical market dynamic. Despite financial strains, consumer behavior remains robust, particularly during key shopping events like Black Friday and Cyber Monday. This paradox - where spending continues despite two-thirds of credit card holders reporting unmanageable debt - suggests potential market vulnerabilities. The generational spending patterns, especially Gen Z's concerning tendency to make unaffordable purchases, indicate a shift in consumer behavior that could reshape retail and financial services markets. For H&R Block, this presents an opportunity to expand their financial advisory services beyond tax preparation, potentially driving new revenue streams in debt management and financial planning services.

Nearly 1 in 2 Americans holds credit card debt, yet holiday spending is slated to increase year-over-year

KANSAS CITY, Mo., Dec. 18, 2024 (GLOBE NEWSWIRE) -- Even as rising levels of debt further strain household budgets, and with many Americans already facing financial pressures that could lead to even greater economic challenges in the year ahead, holiday spending is increasing. These findings echo H&R Block’s (NYSE: HRB) fourth annual 2024 Outlook on American Life report, which reveals that while many generations remain optimistic about their income and buying power, they are simultaneously burdened by overwhelming debt – especially Gen Z.

This year’s report found that most Americans (66%) across income levels and generations feel optimistic about their income growth, retirement prospects, and ability to maintain financial stability. Simultaneously, this theme of optimism is met with the reality that debt and loans are threatening to crush economic momentum for many consumers.

“Following record Black Friday spending, we understand that it can be challenging to make the most of your money while balancing financial responsibilities,” said John Thompson, Vice President of Financial Services at H&R Block. “H&R Block is committed to helping people navigate these pressures by providing the tools, guidance, and support they need to manage their finances wisely and avoid falling deeper into debt during the holiday season.”

A Deeper Look at Americans’ Debt

This holiday season, people are already exceeding expectations set for retail holiday shopping. Online and in-store purchases were higher than expected during both Black Friday and Cyber Monday, nodding to the increase in buying power that Americans of all generations report experiencing.¹ While holiday shopping is higher than expected, many consumers are feeling the strain of this spending – particularly Gen Z and Gen X.

According to this year’s Outlook on American Life report, Gen X is carrying the most credit card debt (55%), followed closely by Millennials (49%), Boomers (47%), and then Gen Z (39%) – though it’s Gen Z that feels the most burdened. Of those holding credit card debt, as many as two in three people say their level of debt is unmanageable. Further, Gen X’s outlook on their finances and greater economic opportunity conflict with younger Americans, as they are the most likely to be “not at all confident” they’re doing what is needed to meet longer-term goals such as saving for retirement.

Credit card debt isn’t the only factor weighing these consumers down: H&R Block found that 1 in 6 Americans hold student debt, over a third reporting they have more debt than they can manage.

Americans of All Ages are Spending More Than They Earn

In addition to increasing amounts of debt, the Outlook on American Life report found that despite growing income and buying power, a third of all respondents across generations reported spending more than they earned in the last 12 months. Only 30% of Gen Z say they do not buy what they cannot afford (vs. 54% of Boomers, 40% of Gen X, and 28% of Millennials), leading them to make unaffordable purchases that pile onto their credit card debt. Plus, with 1 in 5 Americans agreeing that they wouldn't be able to cover household expenses for a full week without a source of income, there is a clear gap between American spending and earning.

“We recognize that spending, earning, and saving looks unique for each and every person, and it is our goal to help every H&R Block client reach the financial future they deserve,” said Thompson. “The insights gathered from the Outlook on American Life report on how Americans are faring financially allow us to further understand how generations are evolving, and what they’re concerned about, so that we can better assist our clients all year round.”

To learn more and read the full Outlook on American Life report, please visit www.hrblock.com/outlook-on-american-life/. To view media assets, including a downloadable report and infographics, visit https://www.hrblock.com/tax-center/media-kit/outlook-on-american-life-report-media-kit/.

_{¹ “197 Million Consumers Shop Over Thanksgiving Holiday Weekend”, National Retail Federation, https://nrf.com/media-center/press-releases/197-million-consumers-shop-over-thanksgiving-holiday-weekend}

About H&R Block
H&R Block, Inc. (NYSE: HRB) provides help and inspires confidence in its clients and communities everywhere through global tax preparation services, financial products, and small-business solutions. The company blends digital innovation with human expertise and care as it helps people get the best outcome at tax time and also be better with money using its mobile banking app, Spruce. Through Block Advisors and Wave, the company helps small-business owners thrive with year-round bookkeeping, payroll, advisory, and payment processing solutions. For more information, visit H&R Block News.  

Media Contacts:
Media Relations:	Heather Woodard, (816) 379-2568, heather.woodard@hrblock.com
	Media Desk, mediadesk@hrblock.com
Investor Relations:	Jordyn Eskijian, (816) 854-5674, jordyn.eskijian@hrblock.com

An infographic accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/cc323fae-2274-4d33-80d3-3ec992daeef1

FAQ

What are the key findings of H&R Block's (HRB) 2024 Outlook on American Life report?

The report reveals that 66% of Americans feel optimistic about financial growth, while nearly 50% hold credit card debt. Gen X has the highest credit card debt at 55%, and one-third of Americans spend more than they earn.

How does credit card debt vary across generations according to HRB's 2024 report?

According to the report, Gen X leads with 55% credit card debt, followed by Millennials (49%), Boomers (47%), and Gen Z (39%).

What percentage of Americans can't cover weekly expenses according to HRB's 2024 study?

The study shows that 1 in 5 Americans (20%) wouldn't be able to cover household expenses for a full week without a source of income.

How many Americans hold student debt according to H&R Block's 2024 outlook?

According to the report, 1 in 6 Americans hold student debt, with over a third reporting they have more debt than they can manage.

What is the spending behavior of Gen Z according to HRB's 2024 report?

Only 30% of Gen Z say they do not buy what they cannot afford, compared to 54% of Boomers, making them more likely to make unaffordable purchases that add to credit card debt.