Latest / Market Pulse / Affordability: What Consumers are Really Experiencing

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Affordability: What Consumers are Really Experiencing · Market Pulse

• 0:02
  Welcome to the Market Pulse Podcast from Equifax,
• 0:05
  where we break down the latest economic and credit insights to help you navigate
• 0:09
  today's business landscape.
• 0:14
  Welcome to the Market Pulse Podcast. I'm your host, Emmaline Aliff,
• 0:17
  leader of the Equifax Advisory team.
• 0:20
  The Equifax advisors align strategy and execution by translating economic and
• 0:25
  industry trends into practical data-backed insights and stories for a
• 0:29
  competitive edge. Our panelists for the discussion today, we have Maria Urtubey,
• 0:33
  Dave Sojka, Tom O'Neill, and Jesse Hardin.
• 0:36
  We have a full advisory staff on call. This episode,
• 0:39
  we're going to talk about what we've been hearing from customers while we've
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  been on the road, and specifically at our hosted Ignite Live event in Atlanta.
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  And we want to make some connections between the macro drivers for how
• 0:53
  individuals experience. In this particular case,
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  we heard a lot about affordability across the financial spectrum.
• 1:00
  And we're going to be sharinga game.
• 1:03
  Dave's going to go into the Headline or Hallucination.
• 1:06
  We have an update from Moody's.
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  We'd like to invite Shandor Whitcher from Moody's to share the macroeconomic
• 1:12
  update.
• 1:13
  Hi, I'm Shandor an economist at Moody's Analytics.
• 1:16
  Here's a quick read on where the US economy stands.
• 1:20
  So we'll start with the big picture,
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  and the short version is that the economy is growing at about 2% or roughly in
• 1:26
  line with its potential. And the unemployment rate is holding in the low fours.
• 1:31
  But beneath that steady headline is an uneasy balance.
• 1:34
  The good news mostly describes where the economy is today,
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  while the concerns are about where it may be headed.
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  So let's start with the good news.
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  Layoffs are rare with weekly initial jobless claims running around 200,000.
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  And a few months ago, they hit their lowest level at nearly 60 years.
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  So as long as people keep their jobs, they'll keep spending.
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  Households are also paying their bills.
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  Credit card and auto delinquencies are a bit above pre-pandemic levels,
• 2:03
  but they've held near 4% of balances for more than two years.
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  Even subprime delinquency has stabilized,
• 2:11
  and businesses are in good shape too.
• 2:13
  High yield bond spreads are about half their historical norm,
• 2:16
  and the AI investment boom is adding real fuel. Now let's look at the concerns.
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  So after inflation, incomes have gone nowhere over the past year,
• 2:27
  prices are up nearly 4%, and wage growth has slowed to about 3%.
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  The saving rate has slipped to around 3% as households are dipping into savings
• 2:37
  to maintain their spending, and that likely won't be sustainable. Now,
• 2:41
  meanwhile, interest rates are adding to the pressure.
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  With the war in Iran pushing oil back near $100 a barrel,
• 2:49
  the treasury yield is close to 5%. It's highest in almost two decades.
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  And this has pushed mortgages north of 7%.
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  And spending leans heavily on the whale off.The top 20% of earners account for
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  about 60% of consumer spending,
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  and this is helped by a richly valued stock market.
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  So if stocks stumble, no one else is in a position to pick up the slack.
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  So what should we watch? Oil prices, long-term interest rates,
• 3:19
  and whether delinquencies stay stable. For now,
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  the pluses should keep the economy going,
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  but it wouldn't take much to knock it off course.
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  Now I'd like to invite Jesse Hardin to provide the Market Pulse credit trends
• 3:33
  highlights.
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  Thanks, Emmaline. And like
• 3:38
  to start out talking about the Market Pulse Index.
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  We launched our 2Q 2026 Market Pulse Index.
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  We saw the Market Pulse Index tick up 0.7% quarter over quarter,
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  and that landed us at 61.3,
• 3:51
  though it remains about 0.1% lower than it did a year ago.
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  We've seen a significant three-year economic gap between the top and the bottom
• 4:00
  earners. We actually saw that it paused this quarter,
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  and that's a trajectory that'sthat's certainlygood to see, but it's,
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  it's not one that wewould call aa trend yet.
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  A major takeaway that we saw this quarter is that income alone doesn't define
• 4:17
  credit management. In fact,
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  about 43.5% of most economically sensitivesegment,
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  that's the striver population,
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  they carry either a prime or a super prime credit score.Conversely,
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  9.3% of the highly stable Thriver segment hold a credit score below
• 4:34
  prime.
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  So it kind of proves that high income doesn't necessarily g -guarantee good
• 4:37
  credit habits. Total US consumer debt has reached 18.2 trillion.
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  That's about 1.6% year-over-year increase,
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  and it's anchored by 13.5 trillion dollars in mortgage debt.Looking at
• 4:50
  originations, origination growth remains broad-based.
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  Mortgages were up about 24.5%.
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  Our originations data is throughthrough May of this year,
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  and so we're still seeing that origination growth largely on the back of some of
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  the trends that we saw with higheror, or more, more favorableyields.
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  Personal loanorigination is up 10- 10.2% year over year.
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  And consumers then I think are showing a little bit of a strategic shift if we
• 5:20
  look at utilization. Bank card limits increased about 5.2 trillion,
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  yet utilization dropped to 20.4% as consumers largely are avoidingeveryday
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  spending on credit cards.
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  Home equity lines of credit jumped 6.6% to nearly 44%.
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  It really shows that activityleveraging the pro- propertyequity that's,
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  that's been built. Delinquencies currently then tell a two-sided story,
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  so on short-term 60-day delinquencies for auto and bank cards, personal loans,
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  those are all down year over year. However,
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  we did see on 90-day mortgage delinquency a continued increase up about 39%
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  year-over-year. Again, that's a, maybe a bit of a higher or scary number,
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  but it does mean thatthat we're sort of getting back to some of the
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  normalnormalization that we saw in that delinquency rate prepandemic.
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  With that, Em, I'll turn it back over to you.
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  All right. Thank you, Jesse, so much for sharing the update there.
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  So as we start heading intothe rest of our discussionI
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  would liketo invite Dave Sojka for our game of headline
• 6:32
  or hallucination. So in our role as Equifax advisors,
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  we review a lot of data on the state of the economy and consumer finances,
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  but we also make a point of bringing that data into the context of what is
• 6:43
  happening in the world and what is happening with the US consumer. In doing so,
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  we often come across reports and stories that seem hard to believe.
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  So if we've decided to challenge ourselves and our listeners to determine what
• 6:55
  is believable and what is not, the game is called Headline or Hallucination.
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  The rules are simple. In this instance,
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  Dave will share a news story with some interesting stats,
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  and it is our challenge to determine if the story he shares is true or not.
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  Thanks, Emmaline. And I think the bar was set quite high last time with Mr.
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  O'neill's story, so I will try and live up to expectations. All right.
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  With the rising, you know, with cost rising across the board,
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  one cost that often gets overlooked by many lenders is the rising cost of
• 7:29
  insurance, specifically auto and property insurance.
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  According to a study published by the Insurance Journal,
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  the average annual premium is projected to increase 4% to about just
• 7:41
  over $3,000 this year after jumping 17% in 2025.
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  Is this a headline or hallucination?
• 7:52
  Sorry, Dave, what specific insurance did you say was...
• 7:57
  Are we talking auto property?
• 7:59
  Don't think you said - Oh, home? It is for property insurance.
• 8:03
  Thank you for property insurance. Okay. Clarify. Yes, property insurance.
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  Though, Dave,
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  I thought you were talking about auto insurance and the fact that I added a
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  16-year-old to my auto insurance policy.
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  .
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  So I think it has definitely gone up. I mean, that is,
• 8:19
  that is clear. Yeah. But I,
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  so the part that we need to evaluate is the stat of the percent.Is there
• 8:24
  consensus, at least I thinkthat the rise is true,
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  but what was the percent that you stated?
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  So I gave you two increase. Okay. I gave you two percentages,
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  which might be too, too difficult. So I'll narrow it down. It's the,
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  it jumped 17% in 2025.
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  Property insurance?
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  Property insurance.
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  And the expectation is 4% going ahead.
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  Is that understanding correct? This year. Yes. All right. Yes. So, I think,
• 8:56
  I think it's not so much, as Emmaline was saying, it's not so muchthat
• 9:02
  we have to believe that insurance has gone up and, and probably will go up,
• 9:07
  but more around are these numbers truly in line.
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  That's a big, that's a big cost. I mean,
• 9:13
  just thinking about the affordability challenges. Mm-Hmm. Yeah.
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  But, but -.
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  I'm going to go with headline. I'm going,
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  I'm going to take the first - You're headline?... The first jump.
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  I'm going to go headline.
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  I'm going headline too. 17% and four this year,
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  although it might be different by regions, I'm in California, so 4% seems low,
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  but the average, national average for this year, it's sounds
• 9:37
  directionally correct. .
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  I'm going to, I'm going to maybe second guess my gut assumption,
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  which it sounded headline to me, but I feel I'm,
• 9:47
  I'm starting to feel kind of like what Maria said. I, the 4% seems a little low.
• 9:51
  Yeah. I guess maybe I'm just in shock from the, the recent increases. However,
• 9:58
  we work with State Farm and we did get some dividends from auto at least,
• 10:03
  not from homeowners. I think I'm going to go that it's
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  that it's not a headline.
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  Yeah. I'm that's the way I'm leaning as well. And,
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  I think if I go hallucination route, that would make it a nice two and two,
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  you know, if we split evenly. But I,
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  but that's actually what I was thinking from the start.
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  I can believe the initial number, the big jump,
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  because that's what's gotten everyone's attention so much over the last year.
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  The 4% seems a little low. Seems a little low.
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  So I'm, I'm going to go hallucination as well. Okay. Okay.
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  And before, Dave, before you reveal it, can I, can I just mention that's, like,
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  what everybody complains about with economist,
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  or with the economists and economics in general, macroeconomics.
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  It's that everybody identifies the, the problems,
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  and then we all just kind of seem to set right at the middle where, you know,
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  there's two, two on one side, two on the other, and we're never in agreement on
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  full direction, so.
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  Well, we'll have to,
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  we'll have to come up with an agreed upon plan of action either way.
• 11:06
  Yes. Yeah. We live up to our expectations.
• 11:08
  Well represented. Okay. So. So we have,
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  we have.
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  Emmaline.
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  And Maria for it to be a headline. Headline.
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  And then Jesse and, and Tom to be a hallucination, right?
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  Mm-Hmm. Okay. Yep.
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  All.
• 11:25
  Right. Da, da, da. It is a hallucination. Mm.
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  While US homeowners premiums are set to rise for a fifth rate year,
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  and the average annual premium is projected to increase 4%,
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  it only jumped 12% and that's 17%.
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  So we were.
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  All right. So close. Now,
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  the expected gains follow several years of steep growth in rates. Hmm.
• 11:58
  Since 2021, premiums have actually increased
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  46%, three times the, as much of inflation according to Insurify. Wow.
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  So I was, as Maria said, your mileage may vary depending on where you live,
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  but the truth hurts insurance is one of the most expensive things
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  homeowners have to deal with.
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  It's easy to not know that because it, like,
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  lumping into escrow and things like that. It's very interesting.
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  Yeah.
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  I'm really glad that you shared that last part because I was feeling bad that I
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  overestimated, like,
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  the 17% that you initially said sounded very reasonable to me. So when you said,
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  you know, it was only 12% jump last year, I was like, "Oh, man, am I, you know,
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  overthinking the problem?" But no, 41% since 2021, I don't feel bad about,
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  - Yeah.
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  Tom, that's what got us scared, right? Yeah, that's what'sjaded us.
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  So real, real quick, becauseas we,
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  as we're going to be talking about our conferences and so on,
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  I do want to clarify, obviously, stories and numbers differ. In the,
• 13:00
  in my meeting with with the FinTech customers,
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  the story that I leveraged in that case said since 2020 premiums
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  went up 80%. Hmm. So this, again. Yeah.
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  Sure if I said only 46. Yeah. So I want to get,
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  I don't want to get any letters from you guys saying I might have misled you.
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  I guess it just depends on what story you're reading.
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  I really like the what you were sharing there with thethe affordability
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  perspective. I think that was a really good lead-in because, you know,
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  we're coming off of our Ignite Live customer conferencea number of customer
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  advisory board events some other conferences we're heading into reallythe,
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  you know, a conference or event type season as well.
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  And so I think some of the things specifically affordability as being a huge
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  topic I'd love to get into that a little bit more.
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  So may be each of you could share some, you know,
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  key things that you that you heard from our customers.
• 13:54
  Sure. Well sticking on the affordability,
• 13:58
  without even going into some of the actual content, let me, you know,
• 14:04
  sort of have a little anecdote that, that to me spoke pretty loudly.
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  So during our Ignite Live sessionor
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  conference, we had a series of breakout sessions.
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  And in the morning,
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  we presented a session on affordability. And at the same time,
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  there were two other sessions going on, one on AI and one on fraud.
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  And knowing that fraud and AI are huge topics, you know,
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  hot, hot buttons that everyone's talking about,
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  I was kind of thinking that we would have a sparse attendance in
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  the affordability session, you know, to, to be honest. And the reverse was true.
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  We had a full room. And I think that in itself, you know,
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  without even going into the comments, which we're going to go into,
• 14:53
  I assume later on in theduring the course of this podcast,
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  without going into some of the content, some of the actual discussions,
• 15:00
  the fact that so many people are so focused on this,
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  this topic that they would, you know,
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  rather listen to that than something about AI or something about fraud that
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  struck me. That surprised me, actually.
• 15:15
  Yeah, Emmaline, I wouldso I was,
• 15:17
  I had the chance to be on stage with Tom presenting in the affordability and
• 15:22
  growth segment. I would say Tom didn't,
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  or he failed to mention that ourdiscussion was right outside of the room where
• 15:28
  the coffee was, so maybe it was a little bit fortuitive.
• 15:32
  That's right. I was, you know, it's a good point. It's a good point.
• 15:35
  Yeah. I will say thoughwe, we had great attendance, a lot of great questions.
• 15:39
  I think one of the interesting things too that we heard isjust
• 15:43
  how much macroeconomic data matters and, and it sort of helps you know,
• 15:48
  not that we need it,
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  but it always helps validate that we're doing the right thing in terms of
• 15:53
  getting information out there and, and,
• 15:55
  and talking about what the macroeconomic data is,
• 15:57
  but what it means and how it translates to lenders.
• 16:01
  And so that was really good to hear the comments about love, you know,
• 16:05
  a lot of comments of love what you do,
• 16:07
  love to hear the macroeconomic data you know,
• 16:11
  more so that it's not necessarily dry the way we make it. So that's,
• 16:15
  that's good. It's good to hear.
• 16:16
  I think the biggest,
• 16:16
  the some of the biggest takeaways that I have on that is the connection,
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  is linking the macroeconomic data to what's actually happening through, like,
• 16:26
  consumer finances. And, and I think that it's a,
• 16:28
  it's veryinteresting how the questions we get drive to that,
• 16:32
  especially if it's like, well,
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  what are the top economic stats that you we pay attention to? And you know,
• 16:38
  when I was doing the economist panel, and which was actually recorded,
• 16:43
  the part that I shared on that in particular was I watch inflation and jobs
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  numbers. Those two things,
• 16:49
  employment and inflation are very tightly connected to,
• 16:54
  consumer finances specifically as we consider can someone cover their expenses?
• 17:00
  And then, in addition to that, the,
• 17:04
  if they're able to cover itfrom an employment standpoint,
• 17:07
  how quickly are they able tocover those, the inflationary concepts? Yeah.
• 17:12
  And we see that direct correlation with Market Pulse Index.
• 17:15
  Yeah, we do. And, and one of the,
• 17:18
  one of the points that was made during that economic panel discussion you
• 17:21
  mentioned, Amy made the point actually, and it was,
• 17:26
  you know, very well or veryvery impactful,
• 17:30
  I should say, not just to me,
• 17:33
  but I think pretty much shared throughout the room.
• 17:37
  She made the point about rising credit card debt, which,
• 17:41
  which is definitely a, been a theme,
• 17:44
  something that's been talked about a lot and a lot of stress and a lot of worry,
• 17:49
  understandably so about, you know, continuous record setting, you know,
• 17:53
  levels of revolving debt, specifically on credit cards.
• 17:57
  But she made the point of, if you take away inflation,
• 18:02
  if you adjust for inflation and, and a couple other standard factors,
• 18:07
  the actual amount of credit card debt that's grown over the last
• 18:13
  several years is about $100, which is more,
• 18:17
  but it's not the end of the world more that we often think when we look at
• 18:23
  record-breaking levels of credit card debt. And we made the,
• 18:26
  that's a similar point, a related point within that affordability session of,
• 18:31
  yes, credit card debt is, is high, and it's,
• 18:36
  and it will continue to break recordsbut
• 18:40
  we see that across populations. The, you know,
• 18:43
  the Thriver population that we speak about,
• 18:46
  they see their credit card debt rise as well,
• 18:48
  but a lot of that is due to simply the fact that prices are higher. You know,
• 18:52
  they, but they're still paying off their cards.
• 18:54
  They're still managing the debt the way that they always have because they have
• 18:57
  the means to do so. The key,
• 18:59
  and this goes back to pretty much anything around affordability that we're
• 19:03
  talking about, is how do those changes impact different populations?
• 19:08
  When we see the Striver population,
• 19:11
  when we see populations who are now having to lean on that
• 19:16
  card debt to make their purchases, to make ends meet, essentially,
• 19:21
  that's where the stress starts to rise.
• 19:24
  And so I think that was a common theme throughout a lot of the discussions,
• 19:28
  both in the session as well as questions and,
• 19:30
  and client conversations afterwards,
• 19:32
  is really not just looking at something simplistically like, hey,
• 19:37
  debt levels are higher,
• 19:39
  but where are those debt levels higher and how is that changing behavior
• 19:43
  accordingly?
• 19:44
  I was at the
• 19:47
  Gold Points Rev Op conference last week,
• 19:49
  and relating to what Tom was saying, the over-utilization of,
• 19:53
  or reliance on credit card,
• 19:55
  and we always typically hear is a subprime population,
• 19:59
  the 20.6 I think is the latestaverage versus the 70s
• 20:04
  for subprime,
• 20:05
  but that shadow risk or dependencytranslates eventually sometimes into
• 20:10
  delinquency rates. And Dave,
• 20:11
  you brought this up yesterday when you were looking at vintage analysis,
• 20:18
  and that being overally ou know,
• 20:19
  that level has increasedfor credit cards specifically.
• 20:23
  It has doubled in the case ofpersonal loan for
• 20:28
  the 25-year, even if it's limited to just the first two quarters.
• 20:32
  But that's also permeating, I would say, over to mortgage holders,
• 20:36
  whether they have locked-in rate or not.
• 20:39
  We see that dependency and that conversion of the use of a
• 20:43
  HELOC loan in the case of those that hold the mortgages from the
• 20:48
  typical home improvement to other uses such as emergency funds
• 20:53
  andcash flow when that's not available from the average 3%
• 20:58
  savings that we are, seeing nationally.
• 21:01
  So we're seeing also those shifts and hidden risk tying to the affordability
• 21:06
  aspects of it as well, not just limited to subprime.
• 21:10
  Yeah, so I presented
• 21:14
  an economic and credit trends overview to our
• 21:19
  FinTech partners, and, you know, while the three themes were,
• 21:23
  you know, divergent population you know,
• 21:28
  mixed performance for FinTech
• 21:31
  loans and cards and products versus the overall market, and then also, I think,
• 21:37
  and what Jesse touched on a little bit in his credit trend overview
• 21:42
  was the rise in HELOC utilization rates.
• 21:46
  And really, the, you know, the leaders there, their main concern, and,
• 21:51
  you know, you highlighted kind of why it's,
• 21:54
  the conference is great and what you heard, how, how do we use this, right? How,
• 21:58
  you know, if we're seeing this, what are, you know, what are our challenges?
• 22:01
  What are our opportunities? And, you know, I give a quick little anecdote.
• 22:07
  Somebody, you know, we, I was talking about the, you know,
• 22:10
  the consumer sentiment view on what, if there's going to be a recession or not.
• 22:15
  And I was asked byone of the leadersyou know,
• 22:18
  what do I think it is and then what's the right, you know,
• 22:21
  how should we think about that?
• 22:24
  And I really threw it back to the audi - you know, to the group and said, "Well,
• 22:27
  you know, what does it matter to you? Whether I tell you if it's 30, if it's 50,
• 22:31
  if it's 70, what is your business model? What is your plan? What is your,
• 22:35
  you know, outlook say? What is your what is your tripping point?
• 22:39
  And so what might be a sensitive number to one company may not be sensitive to
• 22:43
  the other. So much like looking at the average, you know,
• 22:47
  one size doesn't fit all and understand your micro populations,
• 22:52
  micro, understand your micro trends,
• 22:54
  and then see how it applies to your business.
• 22:57
  Yeah, Dave, I think that's a good point.
• 22:58
  I think it sort of hearkens back to what Tom said when we were thinking about,
• 23:03
  or at least when,
• 23:03
  when I think I even got several comments after our presentation,
• 23:09
  and they seem to align to something I said at the first part of the
• 23:14
  presentation. Tom sort of alluded to it, but it was,
• 23:17
  we have all of these macroeconomic indicators and everybody's just, like,
• 23:20
  inundated with so much data.
• 23:22
  You even said it yourself when you think of insurance numbers.
• 23:25
  You get different numbers by different people for the same measure,
• 23:29
  the same metric.
• 23:31
  And one of the things I said or mentioned to the group is you are inundated
• 23:36
  with all of this macroeconomic data, but at the end of the day,
• 23:38
  you're lending to a household, you're lending to a business,
• 23:41
  you're not lending to a GDP number. And I think that resonates.
• 23:45
  It's not so much how does this data impact my portfolio?
• 23:50
  It's how does,
• 23:50
  how do I translate what I'm seeing and what I'm hearing and thinking about the
• 23:54
  source of the data and thinking about how it's put together,
• 23:57
  are there any biases in the data? So a lot of questions like that,
• 24:00
  which I thought was really good to hear, like,
• 24:03
  really good to hear that customers are kind of taking this data and using it,
• 24:06
  but using it you know,
• 24:08
  according to how they understand the data and how it unders - you know,
• 24:11
  how they understand it in relation to their portfolio.
• 24:13
  Yeah. Not to make out that these aggregate numbers or these average numbers are
• 24:17
  meaningless, they're not. They provide the context, and it's the context that's,
• 24:21
  that's really the important thing. I love the line that's, that you use, Jesse,
• 24:26
  although I still think you stole it from me, but we'll settle that, you know,
• 24:29
  after. But we don't want to Backstory.
• 24:31
  Right into.
• 24:31
  A GDP number,
• 24:33
  but that GDP number gives us context of how things are
• 24:38
  moving. And then if we go another layer below and say, okay, well,
• 24:42
  what's driving those GDP changes or those CPI changes?
• 24:47
  Where are we seeing this impact?
• 24:49
  That's sort of helping to describe the playing field.
• 24:53
  That is what all of us US consumers are impacted by. Like,
• 24:58
  these are the things that impact us, but as,
• 25:02
  as we've been making the points throughout this,
• 25:05
  it impacts different households, different consumers in different ways.
• 25:08
  And that ultimately is what we're trying to get a firm
• 25:13
  understanding of.
• 25:14
  Let's jump into, let's jump into how that,
• 25:18
  how we make the connection between the macro and the micro specifically. And,
• 25:23
  you know,
• 25:23
  I'd like to talk a little more about what we're seeing in the latest Market
• 25:26
  Pulse Index report. And you know, we had it released andjust
• 25:33
  this last week as well. And I, you know, if,
• 25:36
  for anyone who isn't familiar with it yet,
• 25:38
  a Market Pulse Index is the holistic measure of consumer financial stability
• 25:42
  that synthesizes data from credit, debt, income, assets,
• 25:45
  and spending capacity intoa metric that we were able to look at from
• 25:50
  a scale of one to 100. Now, I know we talk about it in two ways.
• 25:54
  One is the average, but, you know, as we've continued to say,
• 25:57
  the average on its own is not the most relevant measure.
• 26:00
  How are we seeing some of the divergence and,
• 26:04
  and things change on that? Specifically,
• 26:06
  I'd like to explore things aroundyou know,
• 26:09
  what is the meaning of incomeyou know,
• 26:11
  especially as it relates to defining middle class?
• 26:15
  And how should we be thinking aboutthe subprime experience?
• 26:19
  I, you know, I let off my discussion around the index, and there were,
• 26:24
  there were a lot, a lot of questions. Obviously,
• 26:26
  this is new for a lot of people. Mm-Hmm.
• 26:27
  It might be new for a lot of our audiences. They're hearing this.You know,
• 26:31
  somebody on this podcast told me a great way
• 26:37
  to think about the market pulse index and inflation. And it was,
• 26:41
  you know, if inflation is stepping on the gas pedal in a car.
• 26:46
  Then the market pulse index is a speedometer.
• 26:48
  And I think that's a brilliant way of thinking about how we look
• 26:53
  at it. Another question along with that was somebody asked, "Well,
• 26:58
  have you guys looked into, you know, as Jesse pointed out,
• 27:02
  the change versus the, you know, quarter or versus last year, do we have,
• 27:07
  do we have a feel for what's a significant change yet?" So I'll pose that back
• 27:12
  toyou know, some of you as, you know, as we're going to be talking about this,
• 27:16
  do we know you know, have we come up with what's a significantchange
• 27:21
  in the market pulse index,
• 27:23
  whether that's in the subpopulationor the overall index?
• 27:27
  I would answer that the way that I always answer these things is that
• 27:32
  we've already seen significant changes. We saw a significant change,
• 27:35
  in my opinion, this past quarter. Mm-Hmm. It was not reflected in the aggregate.
• 27:40
  The, the average for the entire US population, it changed, you know,
• 27:45
  basis points. And, and that to me is not interesting.
• 27:49
  But what we do see is, are those subpopulation changes. And, and in this case,
• 27:54
  for instance, we saw, you know, that the,
• 27:58
  that there was a shift upwards, even amongst the, the striver tier,
• 28:03
  the tier that has beensort
• 28:06
  of eroding the most over the last several quarters, you know,
• 28:10
  a few years actually. For the first time in, in quite a while,
• 28:14
  we saw a little bit of an improvement there. By no means is this a,
• 28:19
  you know, shrinking of the K that we've been talking about for two years.
• 28:23
  But the fact that there was some positive movement,
• 28:30
  that to me was significant.
• 28:31
  Well, do you think it's a trend or a trajectory yet? Do you, like,
• 28:34
  what are you thinking on that?
• 28:36
  Well, we now have three years, right, of information. So now we, we - True.
• 28:40
  Could assess this as a trend. And you're right,
• 28:42
  quarter over quarter movement might not be a trend.
• 28:46
  What do you think that trend is, Maria? What is the trend to you? Well.
• 28:49
  I'm still seeing... I, I know that we said that it, the, the separation is flat,
• 28:53
  but if we look at thechart
• 28:55
  where we see the benchmark the, you know,
• 29:00
  mid - 2023 starting point and then the benchmark for each of the three groups,
• 29:04
  the thrivers, the middle, and
• 29:07
  the strivers with the context or in the context of the volume they represent.
• 29:11
  So for example, we've seen that since that point in time toyou know,
• 29:15
  Q2 of this year, the middle has decreased by 5%,
• 29:18
  but it's 5% of 70% of the population.
• 29:22
  So it's a largedecrease in comparison to maybe the 30%
• 29:27
  of the thrivers that have increased, but they're just, on average,
• 29:31
  10% of the total.
• 29:32
  So putting all these layers into perspective and keeping the visibility
• 29:37
  on thosetwo arms, the thrivers and the strivers difference,
• 29:42
  as well as that middle that is the core of the population and
• 29:47
  how the movement or how it's shrinking in this case further.
• 29:51
  So you're saying the one quarter uptick is, is not a trend yet?
• 29:54
  Not yet, I would say.
• 29:55
  Why didn't you just.
• 29:56
  Say that point yourself, man? That's the point you wanted to.
• 29:58
  Make. I'm, I'm curious. I'm curious. That's what you think.
• 30:01
  Yeah. I think I'm there too, mainly because I would say the last quarter,
• 30:05
  the quarter one also wasn't a trend when we saw a downward push
• 30:10
  inin equity markets. So if you think of when we saw the, the,
• 30:14
  the downtick in the Thriver population as a result of some of the headwinds in
• 30:18
  the equity markets the first part of the year, we didn't, we didn't largely say,
• 30:23
  okay, the Thriver population's falling, you know, fantastically.
• 30:26
  So I do think that it's, you know, it's sort of a good,
• 30:31
  a good maybe a good litmus test for what to watch for, but I don't know that,
• 30:35
  you know, dictates a trend.
• 30:36
  I think the other thing that really surprised me out of the
• 30:41
  report is, Emmaline, what you asked us is like income, a good example.
• 30:45
  And of when we look at income, especially the middle population,
• 30:49
  so I think I had mentioned the scores in my initial
• 30:54
  entry, but the
• 30:57
  income is interesting when you look at the middle population,
• 31:00
  the middle pivoting middle of roughly 70% of the population.
• 31:05
  You would think that there may be a skew of income there and there's really not.
• 31:09
  There's a broad distribution from 40,000 all the way up to 150,000
• 31:14
  plus. And so I think it really indicates that the, you know,
• 31:19
  income is certainly, it's a, it's a good measure,
• 31:20
  a good metric to look at and potentially helps for financial durability and
• 31:25
  looking at durability,
• 31:26
  but it doesn't necessarily dictate where somebody's going to fall - Yeah.
• 31:29
  Within one of these bands.
• 31:30
  Yeah, Jesse,
• 31:31
  that was one of the things that I was most struck by in this most recent
• 31:36
  report. And, it's not that this is something has, that has just emerged.
• 31:41
  I think it's more of the fact that we have just realized it when we're looking
• 31:45
  through the data within the context of the Market Pulse Index and seeing what
• 31:49
  it's showing us. And that, yes, as an industry,
• 31:53
  we've used for so long this definition of the middle class,
• 31:59
  which is specifically income based. It's, you know,
• 32:01
  plus or minus within the mean of the national average.
• 32:06
  And, what we're seeing, to your point, is that, you know,
• 32:10
  the people that are actually in that middle tier in terms of their overall
• 32:15
  financial standing, there's a broad mix of income levels represented there.
• 32:20
  And - Yeah.
• 32:21
  It's when you're looking at that in combination with their assets and their
• 32:25
  credit history and, and these other dimensions
• 32:29
  that you really get a fuller understanding what the middle really is,
• 32:33
  and it's not just income.
• 32:34
  And it seems like that's what drives the
• 32:39
  feedback that we get when we hear about Market Pulse Index.
• 32:41
  When we were talking about growthin our session, Tom,
• 32:45
  we talked about durability, like the financial durability of a customer.
• 32:49
  And it seems like I was, I guess if you asked what I was most surprised at,
• 32:54
  it's how many questions I got about growth and how do we grow a
• 32:59
  portfolio? Granted, we were in a conversation about growth,
• 33:02
  but I do think a lot of the questions, you know, surprised me when,
• 33:05
  when I heard customers say,
• 33:07
  "How do I take my portfolio and find more to put into the top of the funnel?
• 33:11
  And then how do I think about that population?" So not necessarily that I'm just
• 33:15
  putting a lot more in the funnel to cut at the, you know, on the back end,
• 33:18
  but how do I really treat those customers knowing that there's a lot of
• 33:22
  opportunity in that segment, you know,
• 33:24
  that pivoting middle segment even when we think about where that is, how do I,
• 33:28
  how do I grow? You know, and that was, that,
• 33:30
  those were a lot of great questions to hear,
• 33:32
  especially in a group of risk managers,
• 33:34
  because that's not typically what you would expect to hear.
• 33:36
  And I don't know how, how far down this,
• 33:38
  this rabbit hole you want us to go down, Em,
• 33:40
  but because there was a lot of good stuff that came out of that session. Mm-Hmm.
• 33:44
  And in that growth mindset that, that Jesse was just alluding to,
• 33:48
  one of the examples used was turning the attention to generational,
• 33:53
  you know, aspects and,
• 33:55
  and the desire for so many people to understand Gen Z and how to how
• 34:00
  to reach Gen Z and grow, you know, their,
• 34:05
  the number of Gen Zs that they have on their books. Mm.
• 34:08
  And the point was made, like,
• 34:10
  if you look at most Gen Z and you're doing an
• 34:16
  analysis to understand who you should target and who you shouldn't,
• 34:19
  and you're using NPV or use, you're using a traditional metric to say,
• 34:23
  "Here's who we want to target," you know, within that,
• 34:25
  you're probably not going to get the volumes that you might otherwise want
• 34:29
  because they're in a financial situation that wouldn't warrant it.
• 34:33
  If you're just looking at current profit,
• 34:36
  if you're just looking at current gains and saying, "Let me target, you know,
• 34:39
  this portion of the Gen Z." But if you instead look at something like customer
• 34:44
  lifetime value,
• 34:45
  if you look at something that takes future value into account of thatthen
• 34:51
  suddenly the picture changes dramatically. Now you're seeing not just, you know,
• 34:56
  the benefit of targeting those Gen Zs, you know, right now,
• 35:01
  but also that value of having a lifelong customer for many, many years.
• 35:06
  And that to me was one of the striking aspects of this whole theme that we're
• 35:11
  talking about of taking that more holistic look and understanding, you know,
• 35:15
  if I want to understand the bigger context in terms of my growth
• 35:20
  and my risk management strategies,
• 35:22
  I can't be looking at just these traditional metrics that I use.
• 35:26
  Yeah, curious Dave, what you think with respect to,
• 35:29
  we have the slight uptick in the quarter do
• 35:32
  you view that as a trend or trajectory or like, or what do you,
• 35:36
  what is your perspective on that?
• 35:38
  I'm in agreement with Maria and Jesse that it's not necessarily a trend
• 35:43
  yet.
• 35:43
  What's our interpretation, you know, knowing that we had... Tom, Tom is,
• 35:47
  Tom's the optimistthinking that it's a, it's, it's a more positive perspective.
• 35:53
  I think he knows how I feel with the... I,
• 35:57
  because I don't necessarily believe it's, like, I don't know yet. I need it.
• 36:02
  I need probably two more quarters.
• 36:04
  I agree it's not a trend. But I also agree that it's, it is a positive.
• 36:09
  It is a data point.
• 36:11
  Starting point. Yeah.
• 36:13
  Yeah. If Tom's positive and Emmaline's negative, then Maria and Dave,
• 36:16
  you gotta split the middle again. You know,
• 36:18
  Maria loves to cite my previous quote of being cautiously optimistic.
• 36:24
  - There we go. I'm going to say, given the last six months,
• 36:28
  I am now cautiously pessimistic. Mm. Myself. Given,
• 36:32
  given the headlines of, you know,
• 36:35
  all of these negatives in the economy, and yet the little,
• 36:40
  the little - uh-huh. US consumer keeps on chugging along.
• 36:45
  Yeah.
• 36:45
  It's... Logic states something, sometime, somewhere,
• 36:50
  something has to, has to break.
• 36:52
  Yeah.
• 36:53
  And, you know,
• 36:54
  how much can we keep piling on that little train to pull us along?
• 36:59
  And so while this uptick says good things,
• 37:04
  again, we understand within that, you know, that
• 37:12
  the declining striving population is an issue. Mm-Hmm.You know,
• 37:15
  counter to the upward mobility, you know, of some of those, those folks.
• 37:19
  It's just really a matter of, you know, when will be, when is too much
• 37:25
  too much? And I'm going to say, you know,
• 37:28
  without going into our next probably podcast category, looking,
• 37:32
  looking ahead I think the holiday shopping season's going to be telling.
• 37:37
  Going back to Tom, it's a positive starting point,
• 37:40
  but the question is that sustainable? So I lean towards what Dave is saying.
• 37:44
  As we're leading into, or, you know, we are in the start,
• 37:48
  beginning of the shopping season, will that be sustainable and will people,
• 37:52
  like, have enough to enjoy
• 37:56
  the holiday spendingas in prior years when it's also been
• 38:02
  questionable if they can affordthe same level of spending? Yeah.
• 38:05
  So I think in conclusion, we believe it's not a trajectory,
• 38:10
  but it was a positive sign that indicates decay did not get further spread this
• 38:15
  last quarter at a consumer finance level. So is that our consensus?
• 38:19
  So did I hear optimistically pessimistic? .
• 38:24
  New word.
• 38:24
  Ironically, Jesse, I
• 38:27
  would actually put myself in that because I've Yeah. My optimism is,
• 38:32
  I do think that my optimism is going to be severely challenged in the months
• 38:36
  ahead. Yeah. And I look at things like consumer sentiment,
• 38:41
  which I have always looked at consumer sentiment as actually a leading
• 38:45
  indicator. You know, can sentiment, not always,
• 38:49
  but often has the capability of telling us things that
• 38:54
  eventually show up in the data because it's what consumers are
• 38:58
  experiencing right here now. And,
• 39:00
  what we've seen most recently is people actually feel a little bit better about
• 39:05
  their current situation.
• 39:07
  They're not as optimistic looking ahead.
• 39:12
  And so I think that actually tells a big chunk of
• 39:17
  the story right there is that, yeah, we see things like this one time, you know,
• 39:24
  uptick. And that's great. That's cool.
• 39:26
  But it doesn't mean that we're looking ahead thinking this, you know,
• 39:30
  this is going to be smooth sailing. I think the opposite is true. Well said.
• 39:34
  Well, I think we've covered
• 39:41
  quite a bit of things today.
• 39:43
  I think that maybe it's time to wrap it up.
• 39:48
  So given our time constraints. But I want to thank Maria,
• 39:53
  Dave, Tom, and Jesse for joining me today. And I'd like to thank you,
• 39:56
  our listeners.
• 39:57
  I hoped you really enjoyed our topic.We had aquite a lively discussion.
• 40:01
  Headline hallucination was quite fun as well.
• 40:05
  And if you have any questions or suggestions for future podcasts or topics or
• 40:10
  things that you'd like to participate in the conversation, you can reach us at
• 40:16
  advisors@equifax.com. We look forward to hearing from you. Thank you.
• 40:19
  The information and opinions provided in this podcast are intended as general
• 40:23
  guidance only and are subject to change without notice.
• 40:27
  The views presented during the podcast are those of the presenter as of the date
• 40:30
  this podcast was recorded and do not necessarily reflect official positions of
• 40:35
  Equifax.
• 40:36
  Investor analysts should direct inquiries using the contact us box on the
• 40:40
  investor relations section at equifax.com.