Welcome to the Market Pulse podcast from Equifax. I'm your host, Tom O'Neill, senior advisor with Equifax, where we look out onto the macroeconomic and credit environments to see how they impact financial institutions and American households. We focus on helping clients navigate economic uncertainty while identifying opportunities for growth in the consumer credit space. I'm thrilled to be joined today by Ian Wright, chief Strategy Officer for IXI.
As leader of the IXI network, Ian leverages data on more than $30 trillion worth of consumer deposits and investments to help financial services to help financial service marketers with their most challenging needs. Today we're gonna be discussing trends in wealth post COVID and how those differing trends impact consumers and what financial institutions need to know about it. But before we get started, let's get a quick economic update from our friends at Moody's. Analytics.
Trade deals are all the rage right now as the Trump administration's August 1st tariff deadline looms. Several agreements have been struck in the lead up to the deadline, including with Japan and the European Union, which will each face a 15% import tax and pay no tariff on US exports heightened uncertainty from US. Trade policy has weighed on hiring and production, but cemented trade agreements will clear the fog going forward within the US.
Price pressures from higher tariffs have been muted so far, but are starting to emerge. The consumer price index rose 0.3% in June, bringing the year ago rate to 2.7%, which is up from 2.4% in the previous month, core CPI, which excludes food and energy rose 0.2%, and the annual rate increase from 2.8% in May to 2.9% in June. Now, some of the increase in the annual inflation numbers in June were due to unfavorable base effects, as inflation was soft at this point last year.
But certain tariff sensitive goods, like household appliances, for instance, showed a meaningful increase in prices as results of firms passing down higher costs from import taxes to consumers. Now, tariffs are altering consumer behavior. Many consumers front loaded purchases earlier in the year to get ahead of expected tariff increases as sales then plummeted in May as tariffs rose and
forward buying ended before partially rebounding in June. But nonetheless, retail sales are only a touch above December levels in the aggregate. As consumers feel the force, the tariff induced price increases, they will pull back on spending even more. There is pressure on the Fed to start easing monetary policy, but with inflation proving stubborn, there appears to be little appetite to cut rates. The Fed has to strike a balance between stable prices and maximum employment,
both of which can be simultaneously undermined by tariffs. However, since tariffs generally represent a one-time price shock, it seems likely that the Fed will prioritize the labor market as growth slows. Therefore, we anticipate 2 25 basis point cuts this year in September and December. Thank you, Moody's. So, Ian, welcome. Thank you for joining us today. Thank you. Great to be here. Tom, always great to have a conversation with you.
Yeah, I always enjoy our conversations and, but this one's being recorded, so we have to watch what we say . I wanted to start off by, by bringing up the, the wealth trends reports that, that Equifax is just releasing based upon the IXI data that I mentioned in the, the intro. And that report highlights pretty significant wealth growth since the 2008 recession. It's the, the growth has actually reached 66 trillion, you know, by, you know,
by the middle of last year, I think it was. What really are the, the primary drivers of that growth? Yeah, it's been a, a fantastic decade and a half for consumers, but as we'll see, maybe that's been a little uneven depending upon who you are and where your economic and financial capabilities exist. But it's really been the stock market that has been fueling wealth especially post COVID. Just between 2001 and two thou, sorry, 2021 and 2026 total
consumer assets went up by $6 trillion. So six of that six, $6 trillion million occurred just in the last five years. So about 9% growth even just recently.
Wow. That's, and, and obviously since it's, since so much of that has, has happened within the, the stock market, I would imagine that it hasn't quite benefited all households, you know, equally across that can you give a, I know we, we can certainly go really deep into this conversation and, and probably will but what, what, what are the different segments that have been influenced differently by this, this growth and wealth? The growth has been interesting, as you said.
So I looked at where were consumers in 2021 and and where were they In 2024, I saw what I call the typical consumer household looking at the median household using medians instead of means or averages. So we don't have those very wealthy people kind of pulling up and skewing the picture a bit. But even though wealth increased by five or $6 trillion during that period, the median value, the median household value for wealth actually decreased to $66,000.
Investments went down by 12%. Deposits stayed about even. So then you kind of have this conundrum, right, well, how did wealth increase overall mm-hmm . But then how did the typical consumer actually be worse off during that experience? And it's, as you said, the growth hasn't been even we look at consumer wealth in three different tiers. If you look at the middle tier, which is the mass affluent, they have a hundred thousand dollars to a million dollars in total deposits and investments.
That segment consists of about 44 million households, and it reduced by about 4%, both in the number of households that are in the segment and also by the number of assets that it controls. Now, where did those households go? Most of them went down to what we call the mass market, which have less than a hundred thousand dollars. Wow. That segment, which is about 75 million households, actually increased by 7% in household counts, but only 1% actually in assets.
So we see that middle tier actually going down, but not contributing to the wealth when it did go down in wealth. On the other end of the spectrum is we do have a good story, and this is where the growth does occur, and that's with the affluent households. If you're someone who has a million dollars, your wealth probably grew over that five year, or I'm sorry, that four year period. In fact, the 14 million households that they're in that segment they grew their assets by
17%. So when we're talking about growth, we're really looking at that sliver of households in the us right. And they hold nearly three quarters of all the wealth. It's, it's interest, what you're describing people, a a large movement moving out of the, the middle tier, essentially a lot moving down. I would imagine some moving up into the, and that middle tier, the, the mass affluent, you essentially shrieking shrinking over that time period.
It's fascinating because that's exactly what we've seen in the credit side of, of the, the world as well, obviously here at Equifax. You know, we, we have a ton of, of credit data that we're constantly sifting through and, and looking for, for meaning within. And we've seen a lot of that same type of, of circumstance. You know, we've, we've been referencing the K shaped for probably the, the same four or five years that, that you're talking about.
And we, we reference it both in terms of economic terms as well as credit terms. And essentially what that is, it's, it's as simple as it sounds, you know, envision a k you know, you've got, you know, a k with a, you know, perpendicular line, and then you've got one, you know, line shooting upwards and one line shooting downwards. It's as, as simple a visualization as that. And it, it represents that, that that trend of a lot of households,
a lot of consumers thriving, doing just fine. Thank you very much. And then others that are, that are truly struggling, and certainly that's, that's always the case, you know, from the dawn of time, that's always been the case where you have your haves, your have nots. What's particularly interesting over the last few years is how much that gap between those populations has grown. You, you mentioned. You, you mentioned the, the, the differences in terms of wealth growth.
We see it in terms of things as simple as credit scores. Mm-Hmm . You know, we have a lot of people that were in those mid-tier credit scores. Some of them certainly have moved up over the last years, a few years. A lot of them have moved down and, and fewer left in the middle. It's a very interesting phenomenon that we're, we're seeing. Yeah. I, I term now, since we're a couple years past COVID, I'm starting to use the barbell effect, right?
And that's another term a lot of virtual services folks use, but it's true. You're seeing the middle kind of disappear and you're either unfortunately moving down or you're being able to benefit and move up either in wealth or it sounds also like in your credit behavior as well. So, Ian, you, you spoke of, of investments, you know, clearly being a fueling factor of, of this, this growth that we've seen in, in wealth over the last few years.
How has that also compared to to deposits to CDs and other forms of, of wealth that, that our financial institution lenders you know, are, are looking at these days? Yeah, if we, if we stick to just liquid investments, so those are, I'm sorry, liquid assets. So those are assets that I can turn into money very easily. So it would be a deposit account or an investment account, right? It's also what a financial services marketer could try to target and bring into their own institution.
We've actually seen deposits remain somewhat flat over that same time period, that three to four year time period and actually went down by a trillion dollars. So it was that 15 trillion, we estimated down to 14 trillion as of the summer of last year. So really all the growth came from the investments. And that's true across the board, but particularly in the stock market and that's owning stock directly.
And again, when you think about who owns stock, even though it's been democratized really across different households in the US where everyone has more stock ownership, we still see the majority of stock ownership at those higher levels of wealth. It's also true through ETFs and mutual funds too. So in my portfolio, if I'm mainly investing in stocks, I'm gonna experience some of that growth, but it's maybe gonna be a little bit diluted if instead if I was just directly
investing in stocks. Also, interesting that in the last several years we've seen bonds come back as well. Bonds have increased in value and they've contributed probably about probably about a third of, of what we've seen in the growth outside of that majority of the stock market. So it's definitely been investments, but not only stocks, mainly stocks, but we did also see those bond levels increase as well.
Ian, we, we spoke about how this growth in wealth has certainly not been even, you know, distributed evenly across all populations. How have you seen this impact across, say, different age tiers, you know, retirees versus Gen Zs and, and, and younger consumers? Has, have there been any developing, you know, trends that are noticeable within those demographics? Definitely, definitely.
And you could probably imagine that folks who are maybe more advanced in age have had the time to build up in wealth, and that's always been the case, but it's even more so the case now. Not only the, the most recent 10, 15 years, really the last 2030 years consumers who were able to invest in the stock market, even at different levels, were able to really derive up their overall wealth and move into those affluent segments that we talked about earlier. We have a segment we call the retirees.
You could probably guess they're at least 65 years old. Why they comprise about a third of the us, 34% of households they own or command 44% of all the assets. So they are an incredibly important segment for financial services marketers to capture not only today, but one of the biggest questions in financial services is this impending transfer of wealth that's over the horizon. When the retirees move on, they're gonna leave their wealth to their families.
They're gonna leave it at different inheritance options. So financial services marketers are then trying to look at, well, who's gonna maybe move into wealth who aren't in wealth today? And we see a lot of the Gen X families spread across those wealth segments I talked about, but they're in that age span that in the not too distant future, and then also maybe in a little bit longer they're gonna inherit their wealth.
So they might not have the largest amount of wealth today, about 27% of assets, but once they inherit wealth, they're gonna really move to the forefront of being the wealthiest segment. You also mentioned the Gen Z segment. They really haven't had enough time to develop their wealth. The investing they can do hasn't been benefited by compounding which is one of the most powerful laws, right? There are some households though,
that have been able to communicate that wealth. It's a very small number. There are less than 400,000 households that are in the Gen Z segment that have at least a million dollars. So they're very hard to find. If you can find them, they're fantastic customers, right? Because the overall opportunity to have a customer lifetime value that's high is incredible with that household. 'cause You'll have them for 40, 50,
60 years. Right. Right. It's interesting noticing, again, the similarities between what we're seeing within wealth trends and what we've also been seeing within, within credit trends and how just the factor of age, you know, is, is such a, a, a noticeable trait, you know, when, when sort of predicting how different, you know, populations or households might might have benefited or not benefited over the last few years using those, those age demographics as,
as an example within the credit trends, you know, field for example, we've seen how within s the same income tiers as well as the same risk tiers, age is such a huge distinction between how well different populations, different households and consumers have weathered the financial storms over the
last few years. Because of what you mentioned earlier. You know, the, the younger generations simply haven't had the time to build up those assets to let you know investments compound over time and, and, and have a financial rock to fall back on when, when times get tough. So it's been been interesting to see that within those same tiers everything else being, being similar, just knowing that, that someone hasn't had as much time within their financial lives to build up
those assets can be a, a predictor. So like you say, if you can find those, hang onto 'em. Yeah. Grab 'em and, and, and hold on. Yeah. Give them your promotional rates, give them your top tier customer service, make sure their needs are met and anticipate their needs as well. Absolutely. Now, how, how about you know, age is certainly an interesting one.
How about geography? Anything that's, that we see on a geographic basis on a state level or, or, you know, a broader territory level that's that you, you can pull out? Yeah, definitely. If, if you do talk to financial service marketers and you say, well, what are your biggest markets? Everyone's probably gonna say the big five states California, Florida, Illinois, New York, and Texas. And those are still the biggest markets overall.
If you're introducing branches somewhere, or if you're doing some new advertising for market acquisitions, those are still gonna be your largest markets. But if you're looking for, well, where are concentrations maybe of the most affluent households or, or households where the median assets is higher? It's interesting that New England starts to actually appear more often than not.
We find that Connecticut, Massachusetts New Hampshire and then New Jersey and New Jersey would include we're seeing from some wealth going out of New York into the suburbs of New Jersey. And then Hawaii have the, the highest assets. So each one of those states on their own might not be the biggest market in terms of volume of the number of households, but if you're looking to increase your average account balances, those are some areas you definitely wanna make sure that you have a presence in.
Right. And then if you wanna take it down to another level, say let's look at some cities and as I mentioned earlier, we'll look at cities from the census definition. So what's known as the core based statistical area or CBSA where you're seeing the largest affluent growth is New York, Chicago la and then also Dallas. We do have then maybe about four cities. There are about the same beyond that in terms of growth, but growth is happening. And it might be in some areas that you suspect,
you hear taxes getting bigger. You hear that, you know, the New York suburbs is where maybe some of that Manhattan money is going to. But I was interested to see that LA is still in that list when at least anecdotally people say wealth is fleeing from California. Right? You're not necessarily seeing that the case in at a level that would make a dent in California being an attractive market.
It's just so large that it still makes sense for any financial services marketer to try to target consumers in that state. Interesting. Okay. So, so then let me put you on the spot then. You know, ah, if we are going to then go ahead and say, all right, we want to target Los Angeles, we want to target, you know, the young affluent, we want to, you know, we want to target something, how does one go about doing that?
Where should marketers be focusing their efforts on capturing, you know, whatever targets, you know, make sense for them to, to define? Hmm, great question. I like to look at it from a three-step process. First, what is the geographic market that presents me with the most opportunity?
And this would be true if I have brick and mortar locations, or even if I'm a digital bank, because I'm still gonna wanna inform my advertising with a different designated marketed area or DMA that I wanna focus that marketing on as well as my digital and online advertising to see which zip codes I'm looking for when I wanna bid on an ad. So I would start with that looking geographically where I want to focus. And as I mentioned, California's a great state still to focus on.
And then further, if I wanna look at a metropolitan area, as I said, Los Angeles is a great area. San Francisco still has significant wealth, and if you include down in the Silicon Valley area, you've got great opportunity there. But then what I would wanna do is understand which households in those geographies are really the drivers that are pushing those numbers up and making it a attractive market that I wanna make sure that I can win.
And that's where we can help understand what is a total a household's total wealth, and also what their deposits versus their investment breakdown looks like. So you can understand if this is a household that if I've got a high yield savings account or a CD that I wanna offer promotional rate on, they can not only open an account, not only fund it, but they can fund it with a significant amount of money. So I get a return on my advertising right away.
And then the third step though, would, would, would be to understand what sort of messages are going to resonate with these households. And that's where tried and true segmentation can help, or what I talked about before might be a little bit more of the quantitative, the hard numbers of where is the opportunity Segmentation helps with the qualitative. Okay, once I know I wanna advertise to these people what's the sort of messaging that I should focus on? What should resonate with them?
Maybe where are they in their life stage? So maybe their needs are gonna be different in this part of Los Angeles versus another part of Los Angeles. You put those three steps together and you, you pretty much have the best way that you can attack any market. Interesting. So you're not just getting to the identification, the, the what, you know. Yeah. But then drilling down very importantly into the how, like, okay, everyone's gonna be trying to, to hit these populations.
How do I distinguish myself? How do I tailor my message to what they are most receptive to? Correct, correct. And, and even sometimes I don't need to know that it's the O'Neill household that I want to target. I just know that there are households in the, where the O'Neill household resides that I want to target.
So there's a big sort of back and forth and understanding someone's identity and resolving a message to someone's actual identity, which is fantastic, but it shouldn't hinder any of your efforts. Awesome. This has been very interesting, and I appreciate your time. Before I wrap up here I do want to sort of do the, do the proverbial 30,000 foot question, open it up and say,
as you look out, you know, we're, we're halfway through 20, 25. Now, as you look out, you know, for the rest of the year, and, and I'll even let you go into 2026 if you desire, what do you see in store? You know, are are we gonna see continued growth? Are we, are we expecting what we've been seeing over the last few years to, to continue? What do you think?
I think so with some caveats with the new administration and that are willing to take, I guess you could say more bold or more significant efforts it's difficult to maybe chart or plot a progress that's gonna be an even line. We might see more dips in valleys and mountains occurring on the deposit
side. So if you're in banking or your credit union, I think we're gonna see deposits stay somewhat flat, unfortunately, and we're still gonna have that hunt for deposits, which everyone has been trying to attract more deposits over the last three years. There is some fatigue that's set in. Fortunately, I think that's gonna continue for the next year or so where you're gonna have to offer some very attractive rates for people to decide to change their existing
relationships and bring more deposits over. On the investment side, though, that has been the engine, right? The stock market, we did have a dip in the stock market earlier this year, but it's come back and we're up year to date. And if this sort of progress and expectation occurs and continues to occur, I think we'll still see growth. Maybe not at the same level that we had before,
but we'll still see growth in the future. However, all bets are off if there are significant policy changes by the existing administration. Right. Yeah, I'll be interested to see, I think not just myself, everyone is going to be interested to see that as well as, right, not just the answer to will there be more growth, but where, you know, yeah. Are we going to see a continued spread of the, of the k, you know, gap or, you know, will things be a little bit more evenly distributed?
Ian, as always, it's a pleasure talking with you and, and, and having you share your insights. If our listeners would like to reach out to you, how can they find you, Ian? Yeah, so best way to reach out to me is through email. My email address is ian dot wright IAN dot W-R-I-G-H t@equifax.com. And I'd love to hear from folks. Awesome. Thank you again, Ian. And to our listeners, I hope you enjoyed today's topic. If you have any questions, you can certainly reach out to us,
especially if you have ideas for a future podcast. Reach out to us at Risk advisors@equifax.com. We look forward to hearing from you. Thank you.