Varo Bank’s Post

The latest Wealth Watch Survey highlights the critical need for innovative financial products like Smart Account, Varo Believe, and our recently announced Varo Line of Credit, in today's difficult economy. These integrated offerings help Americans understand their spending habits, build credit, and access credit for unexpected expenses - ultimately empowering them to alleviate financial stress and navigate economic challenges with greater resilience and peace of mind. #TechBank #Banking #Fintech #DigitalBank #ABankForAllOfUs 

The U.S. economy has been very fortunate to see very stable rates of inflation for the decade plus following the Great Recession...but in the last year or two we've all started to feel additional financial pressure. Varo dug in and talked to real folks about how they're dealing with the rising cost of essentials. Take a look at what our survey shows! #inflation #varobank

📢 Warning signs for a US spending slowdown are emerging, indicating a potential consumer-led recession. Macquarie strategist Thierry Wizman predicts a downturn between now and Q1 2024. Five signals of weakness include rising credit card delinquencies, decreased savings rates, declining consumer confidence, reduced holiday spending intentions, and lower holiday hiring by retailers. Stay tuned for potential economic impacts. #USspendingslowdown #consumerrecession #economicindicators

The resilience of the American consumer has been an unanticipated phenomenon in the four years since the outbreak of the COVID-19 virus. Massive federal stimulus in the wake of the pandemic provided the means for significant discretionary spending and has been a major contributor to overall economic strength, even as corporate earnings have wavered. Although consumer activity remains elevated relative to pre-pandemic levels, it has fallen from highs exhibited in mid-2022. At the same time, the percentage of Americans concerned with meeting certain financial obligations has ticked up, with roughly 19% of households earning less than $50,000 per year now questioning their ability to make minimum near-term debt payments, according to a recent Federal Reserve survey. This figure represents a level not seen since the onset of the pandemic. Concerns regarding debt payments among high-income households, or those with more than $100,000 in annual income, have also seen a notable increase over the last several months. These dynamics, as well as overall spending patterns for both low- and high-income households, are highlighted in our #chartoftheweek by Catherine H.. Read on at the link below.

“To those who have, more will be given; for those who don't have, even what they have will be taken away…”   The pandemic had a significant impact on Americans' savings, regardless of their wealth, due to factors such as government income support, unexpected profits from tech stocks, and reduced consumer spending caused by lockdowns.   This Macrobond chart segmented Americans into five “net worth buckets” and compared their deposits in checking and savings accounts to the last quarter before the pandemic (Q4 2019), adjusted for inflation.    The purple bars represent the peak gains in peoples’ bank accounts. The dark blue reflects how those gains have shrunk, due to inflation, spending and debt paydowns. For the bottom 90 percent of the wealth distribution, the extra savings are almost gone.   Perhaps surprisingly, the merely affluent did relatively better than the ultra-wealthy; the top 1 percent of households by wealth, excluding the richest 0.1 percent, saw their savings jump more than 42 percent. They have also retained the most savings of any group, with almost 17 percent more inflation-adjusted dollars in the bank than four years ago. Source: https://lnkd.in/g3S58XQn ~~~~~~~~~~ Macrobond Financial eliminates the pain of downloading, organizing, analyzing, and visualizing data by automating routine tasks. Say goodbye to manual labor and spend more time on what truly matters: generating valuable analysis and commentary. Request a demo here: https://lnkd.in/gk7hqCFs

Perceptions of credit access compared to a year ago deteriorated in August, with the share of households reporting it is harder to obtain credit than one year ago hitting a new series high. Expectations for future credit availability also deteriorated in August, with the share of respondents expecting it will be harder to obtain credit in the year ahead increasing. https://lnkd.in/ekwnGMWe

When looking at economic growth, the consumer's financial health is an important barometer to check in on. Recent data underscores a concerning trend: both credit card and auto loan delinquencies are on an upswing, signaling potential strain on consumer spending power. Simultaneously, household interest expenses have sharply increased as a percentage of disposable income (according to the chart below), indicating that debt servicing is taking a larger bite out of consumers' wallets. Amidst this, we observe a notable stagnation in higher-income household wage growth. The rise in credit card balances, while reflective of confidence in some respects, may also point towards a dependency on credit amid continued inflation challenges. As financial advisors, understanding these dynamics is crucial. It enables us to guide investment strategies that are responsive to shifting consumer capacities. If you have questions regarding the chart below or about how it may impact your portfolio reach out to me here or visit our website to set up a time to talk: https://lnkd.in/epVAf5-t. #EconomicGrowth #ConsumerHealth #WealthManagement Disclosures: https://lnkd.in/gJZdepvr

While the responsible use of credit cards can help families to bridge the gap during inflationary periods, there remains greater opportunities for fintechs to provide financial literacy tools to aid those cardholders to avoid spiraling debt pitfalls. #financialinclusion #financialliteracy #fintechinnovation #empoweringfamilies #bankingtechnology

Santander US continues to conduct research exploring middle-income Americans’ financial outlook, and one trend that remained strong throughout 2023 was the importance of auto access to middle-income households. The Q4 survey found 83% of respondents believe auto access is important for supporting the U.S. economy so workers can get to and from work. With three in four of Americans relying on a vehicle to get to work and an overwhelming percentage of middle-income Americans working in-person at least some of the time (84%), vehicle ownership remains critical—supporting continued demand for vehicles. As a result, we see that 42% of respondents are considering purchasing a new or used vehicle in 2024. As a leading, auto lender in the U.S., Santander understands how important a vehicle can be for our customers’ ability to earn a living and pursue a prosperous future. At Santander, we are here to support them on this journey. https://lnkd.in/ekttHpi8

When looking at economic growth, the consumer's financial health is an important barometer to check in on. Recent data underscores a concerning trend: both credit card and auto loan delinquencies are on an upswing, signaling potential strain on consumer spending power. Simultaneously, household interest expenses have sharply increased as a percentage of disposable income (according to the chart below), indicating that debt servicing is taking a larger bite out of consumers' wallets. Amidst this, we observe a notable stagnation in higher-income household wage growth. The rise in credit card balances, while reflective of confidence in some respects, may also point towards a dependency on credit amid continued inflation challenges. As financial advisors, understanding these dynamics is crucial. It enables us to guide investment strategies that are responsive to shifting consumer capacities. If you have questions regarding the chart below or about how it may impact your portfolio reach out to me here or visit my website to set up a time to talk: https://lnkd.in/dUSsTh7V. #EconomicGrowth #ConsumerHealth #WealthManagement Disclosures: https://lnkd.in/gJ6Cn9ne