A runaway affordability crisis is pushing Gen Z consumers to rack up their credit card balances to an all-time high.
As Intuit CEO, Sasan Goodarzi has a wealth of data at his disposal to piece together an outlook for America’s economy. The global financial technology company owns personal finance brands including TurboTax, QuickBooks, and Credit Karma. Goodarzi says while the job market is “still strong” Gen Z is still struggling with credit-card debt.
“Credit scores are lower than they’ve ever been, particularly with Gen Z,” Goodarzi told Editorial Director Andrew Nusca at Fortune Brainstorm AI last week. Credit balances across the board are also the highest they’ve been, Goodarzi added, but Gen Z are disproportionately hurting in this category, too.
“[Gen Z] credit card balances are up 36-37%,” Goodarzi added. But there’s one silver lining: “They still have jobs,” Goodarzi said. “And that’s what’s really keeping things together.”
When looking at median pay adjusted for inflation, Gen Z is faring better than previous generations at their age, according to a Pew Research Center report in 2024. But their purchasing power is lower than previous young generations as inflation continues to eat away at their paychecks.
Despite inflation slowing since its pandemic spike, headline inflation ticked up to 3% in September, well above the Fed’s target rate of 2%, according to the Bureau of Labor Statistics.
A large portion of Gen Z resides in the lower half of the economy, with their median income totaling less than $50,000 in more than half of cities, according to a recent SmartAsset report. That’s lower than the median household income in 91% of cities SmartAsset surveyed last year.
In total, millennials and Gen Z, those born in 1981 or later, account for just 10.7% of America’s wealth, according to SmartAsset.
As inflation continues to drive up essential costs in grocery prices and energy bills, a K-shaped economy has emerged, with many Gen Zers stuck in the bottom half. Wealthier Americans who own financial and property assets have survived elevated inflation, while Americans with less financial means have been struck by sticker shock and rising energy prices. This has led to a downward trend in economic activity from low-income earners and an upward trend in assets owned by the wealthy, creating a “K” shape.
But it’s not just Gen Z experiencing the pinch.
“Everybody is being watchful about what they buy, what they don’t buy” and prices, Intuit’s Goodarzi said.
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