Santander US Survey Finds Optimism Rising Among Middle-Income Households as Concerns about Inflation and Recession Ease

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04/02/2024 - 09:05 AM

3 in 4 middle-income households believe they are on track toward financial prosperity, as inflation concerns drop 11 percentage points year over year.
Two thirds of middle-income households have made cuts to their budgets to cope with higher prices.
6 in 10 middle-income consumers are missing out on an opportunity to grow savings, with 56% still earning less than 3% interest.
4 in 10 middle-income Americans are spending 7+ hours per week in their vehicles, demonstrating the importance of vehicles in their lives.

BOSTON--(BUSINESS WIRE)-- Santander Holdings USA, Inc. (“Santander US”) today announced findings from its recent Paths to Prosperity survey showing middle-income Americans are optimistic about their financial futures, with 74% believing they are on the right track toward financial prosperity during the first quarter of 2024.

(Graphic: Business Wire)

Middle-income Americans’ concerns about a possible recession and inflation appear to be easing. Many households have adjusted to rising prices, with 45% saying they are better equipped to handle increased prices. While inflation remains a top concern, it was cited by only 46% of respondents, versus 57% in Q2 of 2023. During the same period, those expecting a recession in the next 12 months dropped from 69% to 60%.

“While middle-income households have had to navigate higher prices due to inflation, it is encouraging to see consumers taking positive steps to manage their finances and adjust their household budgets,” said Tim Wennes, CEO of Santander US. “At the same time, many continue to miss out on the opportunity to leverage the current rate environment to grow their savings. For most consumers, this is the first time in a generation when they can be earning meaningful interest on their hard-earned savings.”

The survey found that six in 10 middle-income Americans have not moved money to earn higher yields on their savings, and more than one in four do not know their current rate. Of those who know what their current rate is, 56% of middle-income consumers are earning less than 3%.

The data uncovered the opportunity for digital banking to remove barriers for middle-income households by reducing the time and effort it takes to open an account. About seven in 10 middle-income Americans (68%) would consider opening a new savings account to receive a higher rate of interest if the account could be opened in under 10 minutes. Further, 64% of consumers would be more likely to move money into a higher yielding account if they could do it digitally. The Santander US survey found consumers believe opening new accounts can be done quicker digitally.

“Consumers are looking for a secure and convenient banking experience that can be delivered through digital channels,” said Wennes. “Digital banking is saving them time, providing 24/7 access to finances, and simplifying their overall banking experience. At Santander, we have been investing in enhanced capabilities and innovative offerings to give our customers a seamless experience.”

The Santander US survey found that 85% of middle-income customers are interacting with their bank accounts digitally to complete at least half their transactions. Two-thirds of middle-income consumers say completing banking transactions digitally saves them 15 minutes or more. Nine in 10 middle-income Americans last reviewed their accounts digitally, demonstrating how digital banking is enhancing consumer engagement with accounts.

The study, which built upon previous research, assessed middle-income Americans’ current financial state and future aspirations, with a focus on how current economic conditions have impacted their households. It also explored their financial relationships with identified drivers of prosperity, including banking providers and vehicle access.

Spending Priorities

As middle-income Americans have adjusted for inflation concerns, 67% have made cuts to their household budgets, forgoing major purchases such as vacations, vehicles, and home repairs. However, many remain focused on their finances and plan to use their tax refunds to help. Six in 10 middle-income households expect to receive a tax refund for their 2023 filing, and 42% say they plan to apply it toward debt or save it for the future. Of those who plan to use it to help pay for a large purchase (14%), the top selections were a vehicle, home improvement or home.

Vehicle Access

Vehicle access remains essential for consumers as they pursue financial prosperity, as vehicle access has an outsize role in their daily routines and access to employment. Two-thirds of middle-income Americans spend at least four hours a week in their vehicles, and four in 10 spending more than seven hours per week in their vehicles. Respondents (76%) overwhelmingly rely on a vehicle for getting to work, and 84% say vehicle access offers them more flexibility in how and where they live. However, the current cost of ownership is a barrier to purchasing vehicles. More than half (55%) deferred purchasing a vehicle in the past year due to cost considerations. To finance a vehicle, four in 10 middle-income Americans would need monthly payments to drop by $100 to $200 before purchasing. Still, nearly half (45%) of middle-income Americans are considering purchasing a vehicle in the next 12 months.

This research on financial prosperity, conducted by Morning Consult on behalf of Santander US, surveyed 2,211 Americans who are bank and/or financial services customers, ages 18-76. Survey participants are employed or looking for work and own/use at least one financial product, and are the primary or shared-decision maker on household finances with household income in the “middle-income” range of ~$50,000 to $148,000. This Q1 study was conducted in February 2024. The interviews were conducted online, and the margin of error is +/- 2 percentage points for the total audience at a 95% confidence level. The previous Q4 study was conducted December 2023, the Q3 study was conducted September 2023, the Q2 study was conducted May 2023, and the inaugural Q1 study was conducted January 2023. The data was weighted to target population proportions for a representative sample based on age, gender, ethnicity, region, and education.

The full report and more information about the Santander US survey is available here.

About Santander US

Santander Holdings USA, Inc. (SHUSA) is a wholly-owned subsidiary of Madrid-based Banco Santander, S.A. (NYSE: SAN) (Santander), recognized as one of the world’s most admired companies by Fortune Magazine in 2024, with approximately 165 million customers in the U.S., Europe and Latin America. As the intermediate holding company for Santander’s U.S. businesses, SHUSA is the parent company of financial companies with more than 11,800 employees, 4.5 million customers, and assets of over $165 billion in the fiscal year ended 2023. These include Santander Bank, N.A., Santander Consumer USA Holdings Inc., Banco Santander International, Santander Securities LLC, Santander US Capital Markets LLC and several other subsidiaries. Santander US is recognized as a top 10 auto lender and a top 10 multifamily bank lender, and has a growing wealth management business. For more information about Santander US, please visit www.santanderus.com.