Having gathered data for more than four years, the Federal Reserve Board of New York unveiled a new report yesterday, the Survey of Consumer Expectations Household Spending Survey, which details experiences and expectations regarding how individuals and households are spending their money. For example, should a respondent suddenly see a 10% increase in his or her income, 37% of respondents would use that additional money to pay down debts, up from 36% a year earlier.
The report details that households are making fewer “large” purchases than in years past, such as furniture, electronics, home repairs, or a new car.
Overall, households expect to increase their spending by 2.8%, as of December 2018, up from 2.3% a year earlier, according to the report.
Should a household or individual suffer a 10% drop in income, the percentage of respondents that would increase their borrowing to make up for the drop in pay increased by nearly 25% in the past year.
For companies in the credit and collection industry, knowing how consumers are going to behave in the coming months and years can help shape collection strategies and can be used to help score accounts for collectability. The Fed’s report breaks down the data demographically, so it can be applied to different age brackets or education levels to hep further refine collection models.
