Middle-income consumers expect finances, job market to improve this year
Americans are optimistic about their own financial well being and the economy at large in 2025.
A new survey from financial institution Santander Holdings USA, Inc. revealed that 76% of middle-income households are expecting their financial situations to improve in the next year, with 74% believing they are on the right track. Expectations of a recession in the year ahead dropped 17 percentage points in the past year, while nearly two-thirds of middle-income households (64%) believe the job market will be stronger in 2025.
In 2025, six-in-10 consumers said they expect inflation to improve. The wide majority (85%) of those surveyed reported taking some action in the fourth quarter of 2024 to manage inflation, with more than half (53%) scaling back on retail spending. As a result of making tradeoffs, three-in-four middle-income households have remained current on their bills, and nine-in-10 made progress toward their financial prosperity in 2024. Looking forward, 95% plan to proactively improve their financial situation in 2025, including paying down debt (45%) and saving or investing more (44%).
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“The consumer enters 2025 increasingly optimistic with a sharp rise in confidence in the economy, supported by expectations for a stronger job market and lower inflation,” said Tim Wennes, CEO of Santander US. “Our research has shown a resilient consumer over the past few years, as households make necessary tradeoffs and prudent financial decisions to navigate financial pressures. As optimism spreads among households, we hope to see this translate into prolonged economic growth and improved consumer outcomes.”
According to the survey, homeownership affordability is the #1 reason middle-income Americans do not own a home, but less than three-in-10 (29%) believe homeownership is a requirement to be financially prosperous. Among those who have recently purchased a home (since March 2020), 73% have made spending cuts to keep up with the costs associated with owning a home, and 60% live paycheck to paycheck because of housing expenses. These outcomes were less common, 48% and 32%, respectively, among those who purchased their home prior to March 2020.
Access to a vehicle remains essential to financial prosperity, with 81% of those surveyed saying it provides them flexibility in how and where they live, and the overwhelming majority (73%) relying on a vehicle to get to work. At the end of 2024, strong pent-up demand for vehicles remains with nearly half (45%) considering buying a vehicle this year, and one-in-three intending to purchase. Of those considering purchasing a vehicle in 2025, 65% have started researching options and 46% have already visited an auto dealership. Potential auto buyers indicate that decreases in cost of living and auto prices would be the biggest factors impacting the likelihood of making a vehicle purchase in 2025.
Methodology
Santander’s survey on financial prosperity was conducted by Morning Consult, and surveyed 2,213 Americans who are bank and/or financial services customers, ages 18-76. Survey participants are employed or looking for work, 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. The study was conducted Dec. 5-8, 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 data was weighted to target population proportions for a representative sample based on age, gender, ethnicity, region and education.
