Experts from Comerica Bank, Cox Automotive and TransUnion all relayed this week that a myriad of circumstances is eroding consumer sentiment of individuals who might be currently in your auto portfolio or who might be added soon.

While TransUnion reported more than half of Americans (55%) remain optimistic about their financial future even as inflation and fears of a recession weigh on their finances, the credit bureau’s newly released Consumer Pulse study from Q2 2022 found that optimism levels dropped from 59% the previous quarter and 64% at the end of 2021 largely due to an array of challenges.

The TransUnion study found that inflation is the greatest worry for Americans — by a wide margin — with 63% of respondents ranking it as their top or second greatest concern. A recession (30%) and rising housing and rental costs (25%) followed.

The results from the May 12-19 survey of 2,739 adults found that concerns differed based on generation.

Experts said stock market volatility is a much greater concern to Baby Boomers compared to all other generations, whereas Gen Z had an outsized concern about jobs.

The study also indicated that the youngest generations were most positive about their financial future with 70% of millennials and 66% of Gen Z being optimistic about their household finances in the next 12 months compared to just 39% of Baby Boomers.

“It’s clear that Americans are facing many tests, whether it’s inflation, high housing and rental costs, rising interest rates or fears of a recession, but there’s also strong evidence that consumers are weathering this excess of challenges,” said Charlie Wise, senior vice president and head of global research at TransUnion.

“The majority of consumers are still optimistic. Jobs are plentiful and many consumers have seen material increases in their income over the past year, particularly those in lower income tiers. This has helped consumer credit performance remain steady — all reasons for optimism,” Wise continued in a news release.

Meanwhile, Cox Automotive chief economist Jonathan Smoke recapped more confidence erosion in a blog post uploaded on Monday.

In his analysis, “Smoke on Cars,” the Cox expert recapped that according to the Conference Board, consumer confidence declined 2.0% in May. The decline left confidence down 11.3% year-over-year.

“The underlying measures of present situation and future expectations both declined. Plans to purchase a vehicle in the next six months declined but was slightly higher than a year ago. Plans to purchase a home also declined and was higher year-over-year,” Smoke wrote.

“The Morning Consult daily index also declined in May, as it was down 4.4% for the month. The daily index from Morning Consult was at its lowest level so far for the pandemic on May 30, as inflation, declining equity markets and increasing cases of COVID driven by omicron variants weighed on consumer attitudes,” he continued. “The daily index declined through the first three days of June as surging gas prices increased to new nominal records.”

Furthermore, Comerica Bank chief economist Bill Adams elaborated further about the ingredients burdening consumers that TransUnion and Cox Automotive discussed.

“The expansion is slowing amid headwinds from Russia-Ukraine, surging energy and food prices, the end of crisis-era stimulus programs, tighter monetary policy, and Chinese lockdowns. But the U.S. is not currently in a recession, and the first quarter’s negative GDP looks like a red herring,” Adams said in his latest U.S. Economic Outlook.

“U.S. payrolls averaged a monthly increase of nearly half a million in the first five months of 2022, the unemployment rate is a solid notch lower than at the end of 2021, and industrial production is growing solidly. However, industries that surged during the pandemic like retail, e-commerce, and housing are retrenching as consumer spending shifts from goods back to services,” Adams continued.

“Inflation likely has peaked in year-over-year terms but will stay well above the Fed’s target through the end of 2022 as Russia-Ukraine keeps food and energy prices elevated. Prices of durable goods including used cars and trucks have started to edge back down, and wage growth is slowing,” he went on to say. “Retailers are starting to discount consumer goods again after a big increase in inventories since the fall of 2021. But there is no relief in sight for food, gasoline, diesel, and other energy prices as the Russia-Ukraine conflict grinds on.”

With prices set to stay high, TransUnion’s study showed the possibility of individuals being able to handle them — at least for the time being.

TransUnion said its study found that income appears strong with 81% of respondents reporting their income stayed the same or increased in the past three months; 90% expect the same in the coming year. More people reported starting a new job or a business than losing a job or quitting in the last three months. This is in line with May’s 3.6% unemployment rate from the U.S. Bureau of Labor Statistics.

Despite the many positives in today’s consumer credit market, TransUnion acknowledged nearly all Americans (95%) reported being concerned about inflation, with 38% extremely concerned. This is up 11 percentage points from the first time this question was asked in Q3 2021.

TransUnion mentioned that about two-thirds (64%) of all Americans expect to change spending in the next three months because of inflation. Of those, 52% say they’ll cut discretionary spending such as dining out, travel and entertainment. Approximately 41% say they’ll cut spending on retail shopping and 40% on making large purchases.

Overall, TransUnion noted that 33% of Americans plan to apply for new credit or refinancing in the next 12 months, a 5-percentage point drop from Q1 2022. Millennials (56%) and Gen Z (46%) plan on being most active in the credit markets with Gen X (32%) and Baby Boomers (10%) lagging, according to the credit bureau.

Of those who plan to apply for new or refinance existing credit within the next year, TransUnion said 32% say they’ll apply for a new home loan, an increase of four percentage points from Q1 2022. Millennials lead all generations at 40%.

“We are living through an unconventional period wherein consumers are facing more financial challenges than they have in at least a decade. Yet the job market is strong and most people are using the credit they have in a responsible manner,” said Margaret Poe, head of consumer credit education at TransUnion.

“This also is a time when consumers should remain diligent about their credit and put into practice healthy habits such as making on-time payments and keeping credit utilization at 30% or less,” Poe went on to say.