US finance – trends and insights roundup for 2024
As the financial year concludes, the US finance landscape presents a mix of innovation, consumer adaptation, and persistent challenges. This article provides a detailed overview of trends and consumer behaviors across the financial spectrum in 2024.
The shrinkflation effect
Shrinkflation continues to be a key concern for American consumers, with 82% expressing apprehension— up from 73% in 2023. Products such as snack foods (68%), dry goods (49%), and frozen foods (34%) top the list of categories where shrinkflation is most noticeable. Generational differences emerged in responses: while consumers aged 45-64 are most likely to stop purchasing certain products altogether (27%), younger demographics opt for alternative strategies like buying in bulk (20%). Corporate profit margins remain the top-perceived culprit, with 59% of Americans attributing shrinkflation to companies prioritizing profits.
High-income earners and their financial concerns
Despite earning over $100,000 annually, a portion of high-income Americans report financial challenges. One in ten find it difficult to manage their income (9%), and nearly a fifth (18%) express doubts about affording retirement. Education plays a pivotal role among this group, with 78% crediting their success to their academic background. Moreover, high-income earners exhibit greater job satisfaction, with 68% reporting they love their work compared to 51% of the general population. However, 56% of these individuals do not engage financial advisors, indicating an untapped opportunity for wealth management services.
Retirement expectations: Gen Z and millennials
Young adults are redefining retirement timelines and savings goals. A third of Gen Z anticipates retiring between ages 61 and 70, while Millennials display a slightly earlier retirement expectation, with 30% targeting ages 51-60. Savings aspirations vary, with 37% of Gen Z aiming for $500,000-$1 million, while 26% of Millennials set their sights higher at $1 million - $2 million.
The rise of digital banking
While 78% of Americans maintain checking accounts, the increasing appeal of digital-only banks is reshaping the financial landscape. Among digital-only bank users, ease of money transfer (55%) and user-friendly apps (47%) are top motivators. Despite these advancements, traditional banks retain a trust advantage, with 47% of Americans favoring them over neobanks.
Efforts to integrate mobile services into neobanks is gaining traction. Among potential adopters, 65% expressed interest in bundled packages that include mobile data and eSIM services, showcasing the potential for cross-sector innovation.
Financial advisors and consumer preferences
Only 27% of Americans work with financial advisors, yet trustworthiness remains a paramount factor for those who do, valued by 60% of users. High-income individuals are more likely to use advisory services, particularly for personalized investment strategies. However, the reluctance of the remaining majority to engage advisors points to a significant gap in financial planning education.
Banking fraud
Banking fraud impacts over a quarter of American adults (26%), with older individuals disproportionately affected. Data breaches (61%) and a lack of scam awareness (60%) are cited as primary factors contributing to the risk. Practical mistakes, such as insufficient safeguarding of personal information (52%) or public PIN entry (40%), further exacerbate vulnerabilities.
The evolving payment landscape
Digital payment adoption continues to grow but traditional payment methods, particularly cash, remain dominant for in-store purchases, used by 67% of consumers.
Mobile payment adoption skews younger, with 25% of 18-24-year-olds relying on these methods compared to just 8% of those aged 55 and above. Security and user experience remain top priorities for app users, underscoring the importance of seamless, trustworthy platforms.
The road ahead
As we step into 2025, the US financial sector stands at the crossroads of innovation and consumer apprehension. While advancements in digital banking, payments, and financial services signal progress, concerns about inflation, security, and economic uncertainty emphasize the importance of trust, education, and accessibility in shaping the future of finance.