It’s been a while since I’ve played Jenga, but I think about that game whenever I read reports about consumer confidence.
That seems like a random connection, but it’s actually quite accurate.
Consider this headline from U.S. News & World Report: “Consumer Sentiment Strong in July, Inflation Expectations Drop.” The story began, “Consumer sentiment jumped 12% in July, with improvement occurring across all demographics, income, age and political affiliation.”
Now three months later, there’s this headline from Yahoo Finance: “Consumer sentiment falls to 5-month low as frustration mounts over higher costs.”
Obviously, consumer confidence is a fickle indicator. In fact, it’s just like Jenga.
Name of the game
If you’ve never played Jenga, it’s really simple. You build a rectangular tower of 54 wooden blocks, and each player takes turns removing one at a time. Eventually, the whole thing comes crashing down. The last player who successfully removed a block is the winner.
That describes consumer confidence, because everything is steady until it suddenly collapses.
This matters to me because I often talk with people who say they can handle their personal debts just fine, and they don’t even need a free, no-obligation, in-depth debt analysis from a certified credit counselor – until everything comes crashing down.
“I had no warning,” they often tell me.
But like Jenga, you can spot the wobbling beforehand. It can be subtle.
I look at other economic indicators. Specifically, polling. Here’s what happened at the same time those consumer confidence numbers came out…
In the workplace
Every October, the insurance firm Aflac releases its Workforces Report. Its conclusion this year:
Americans in the workplace are feeling more confident about their personal finances and benefits than they did a year ago, yet beneath those encouraging gains lies a more complex reality: They are increasingly burned out, more financially vulnerable and far more unprepared to weather the cost of a serious health event
Basically, while more than half of the 2,000 employees polled by Aflac said they feel good about their finances, “Nearly half (47%) say they could not cover $1,000 in out-of-pocket costs from a medical event, and 45% couldn’t go for one month without a paycheck.”
That’s a brittle budget if I’ve ever heard one.
In the home
This headline struck me the hardest: “More Than Half of Americans Are Considering a Loan Within the Next Year Despite Inflation and High Rates.”
It’s from a new poll of 1,500 Americans, ages 18 to 64. It concluded:
The majority of respondents (roughly 53%) are open to taking out a loan in the near term, 22% said they were considering a loan within the next six months, and 20% may take out a loan before the end of 2027. Buying a vehicle was the most common reason for borrowing, cited by 24.3% of respondents, ahead of emergency expenses (12.7%), buying a home (10.9%), and consolidating debt (8.4%).
It’s a bad omen when Americans are contemplating new loans when they know interest rates are high and inflation is cutting into your earnings. The danger is delayed, because those interest rates might not bite at first. But they will eventually.
I’m going to bet that many of these folks who plan to take out loans have steep credit card balances, too.
At Consolidated Credit, we meet many clients who have both, and that combination is what eventually topples their personal Jenga game.
Around the world
It’s often said the world is more interconnected today than ever before, and that’s certainly true when it comes to personal finances.
NielsenIQ, the same company that measures TV ratings, also asked 21,000 adults in 31 countries about their money problems. The top result: “34% of global consumers say they are financially worse off than they were a year ago, while 30% of consumers say they are financially better off.”
It was no surprise that “77% of financially challenged consumers blame rising living costs for their worsening financial situation.” Sadly, there’s no immediate signs that inflation is abating anytime soon.
On the phone
I see a worldwide Jenga game that might soon fall down – and land on some very good people who are just trying to balance everything happening in their lives.
If you live in the United States, you have an option not everyone else in other countries do. You can call a nonprofit credit counseling agency for a free, in-depth debt analysis right over the phone. A certified credit counselor walks through everything you earn and spend, then helps you design a realistic household budget.
With that in hand, you can hang up if you so choose. Or you can listen to your counselor run through your options to getting out of debt and keeping more of your own money.
I’m biased, of course, but I believe calling Consolidated Credit keeps your finances from falling over. I’ve seen our counselors reinforce the finances of thousands of people over my nearly two decades here. I’m quite proud of that, because at the end of the day, your life is not a game.
