Latest news with #MichaelLiersch
NBC News
28-02-2025
- Business
- NBC News
Americans are suffering from 'sticker shock' — here's how to adjust
Whether it's a dozen eggs or a new car, Americans are having a hard time adjusting to current prices. Nearly all Americans report experiencing some form of 'sticker shock,' regardless of income, according to a recent report by Wells Fargo. In fact, 90% of adults said they are still surprised by the cost of some goods, such as a bottle of water, a tank of gas, dinner out or concert tickets, and said that the actual costs are between 55% and 200% higher than what they expected depending on the item. Many Americans are still cutting back on spending, making financial choices and delaying some life plans, the Wells Fargo report also found. The firm polled more than 3,600 consumers in the fall. 'The value of the dollar and what it is providing may not be as predictable anymore,' said Michael Liersch, head of advice and planning at Wells Fargo. As a result, 'consumer behaviors are shifting.' Still, adjusting to a new normal takes time, he added: 'Habit formation does take a while. Next year what you can imagine seeing is consumers being a little less surprised or shocked by prices and adapting to the current situation to create that goals-based plan.' Some change is already apparent. Although credit card debt recently notched a fresh high, the rate of growth slowed, which indicates that shoppers are starting to lean less on credit cards to make ends meet in a typical month, according to Charlie Wise, TransUnion's senior vice president of global research and consulting. 'After years of very high inflation, they are kind of figuring it out,' Wise said. 'They've adjusted their baseline for what things cost right now.' But with President Donald Trump 's proposed 25% tariffs on imports from Canada and Mexico set to take effect in March, there is also the possibility that prices will rise even further in the months ahead. Consumers fear inflation will pick up Mexico and Canada tariffs could put pressure on some consumer staples, experts say. That includes already high grocery prices, which are up 28% over the last five years, according to the Bureau of Labor Statistics. The prospect of tariffs and renewed inflation is weighing heavily on many consumers. The Conference Board's consumer confidence index sank in February, notching the largest monthly drop since August 2021. The University of Michigan's consumer sentiment index similarly found that Americans largely fear that inflation will flare up again. A recent survey found that 23% of Americans expect to worsen or go into credit card debt this year, in part because they are making more purchases ahead of higher tariffs. How to battle sticker shock Consumer savings expert Andrea Woroch recommends setting a spending plan and tracking expenses. That helps you pinpoint wasteful purchases and those where prices are accelerating and take steps to save. 'Write out all your expenses currently from those essentials and the wants, figuring out an average monthly spend for fluctuating categories,' she said. 'Once you have it all listed out, you can begin hacking away at unnecessary purchases or at least set goals for reducing in those nonessential categories.' Identify triggers that lead to impulse purchases to help dodge them in the future, Woroch also said. 'If you can't resist a sale, then unsubscribe from store newsletters and turn off push notifications in deal apps.' Ultimately, being more in control of your spending will 'reduce the stress that comes with worry about how you're going to afford higher prices,' Woroch said.
Yahoo
25-02-2025
- Business
- Yahoo
More Americans are cutting back on spending in 2025. Here's why.
According to a recent Wells Fargo Money Study, 76% of Americans intend to reduce their spending in 2025. Wells Fargo Head of Advice and Planning Michael Liersch joins Wealth host Brad Smith to examine this consumer trend and explore where Americans are redirecting their money. Liersch identifies younger generations — those in their 20s to 40s — as leading this spending reduction movement. Rather than simply cutting back, these consumers are strategically reallocating funds toward investment opportunities, with many expressing that they "want to save and invest more this year." The spending pullback is most evident in discretionary categories such as travel, vacations, and home-related expenditures, including renovations and relocations. Liersch explains: "There's just a lot of uncertainty in the market right now, and people are trying to make those good trade-offs so that they can sustainably meet their savings and investing goals." "People want to align their values with their spending rather than just going through life and doing things just out of convenience," Liersch tells Yahoo Finance. Watch the full interview above for practical advice on resetting your financial habits in 2025. To watch more expert insights and analysis on the latest market action, check out more Wealth here. This post was written by Angel Smith Sign in to access your portfolio
NBC News
27-01-2025
- Business
- NBC News
Net worth of millennials has quadrupled: Why some call it 'phantom wealth'
Millennials have come a long way since their days of being called lazy or entitled. Despite reaching key milestones later than their parents once did, they are now wealthier than previous generations were at their age. 'Younger families in the U.S. made remarkable gains,' according to an analysis of 2022 data by the St. Louis Federal Reserve. Collectively, millennials are now worth about $15.95 trillion, up from $3.94 trillion five years earlier, according to Federal Reserve data. Still, very few millennials would consider themselves wealthy. The disconnect between being rich on paper and feeling well off has been referred to as 'phantom wealth.' For example, gains in the value of a home or a retirement plan can feel like phantom wealth because they are illiquid and have no bearing on day-to-day cash flow. Boosted by a strong jobs market and rising wages, many in this age group have purchased homes and benefited from soaring home values. To that point, the St. Louis Fed report found between 2019 and 2022, home prices jumped 44%. Largely driven by real estate gains, the 'median wealth of these younger people more than quadrupled' during this three-year period, the report said. However, homeownership does not offer the same sort of safety cushion other investments do, noted Michael Liersch, head of advice and planning at Wells Fargo. 'Unless you are willing to downsize, you are really not going to monetize the increase in that asset,' said Liersch, especially in the case of a primary residence. 'Millennials, in particular, haven't been able to use that wealth.' Millennials have 'phantom wealth' 'Phantom wealth is a nonsensical term: assets either exist or they don't,' said Brett House, an economics professor at Columbia Business School. However, there is a very real phenomenon at work. As it turns out, 'millennials experienced a sharp swing in their relative standing,' the St. Louis Fed report found. The median wealth of older millennials, between the ages of 36 and 45, was 37% above expectations. The wealth of younger millennials and older Gen Zers, or those aged 26 to 35, exceeded expectations by 39%. Compared with other generations, millennials are also more likely to say that their income went up over the last few months and that they expect their earnings potential to increase again in the year ahead, according to another report by TransUnion. But even as households became wealthier, inflation and instability have left more people in the bucket of so-called HENRYs — 'high earners, not rich yet,' House said. And 'the 'HENRY' phenomenon isn't limited to millennials or Gen Z,' he added. 'It's harder for every generation to feel financially comfortable when the management of so much risk related to employment, healthcare, retirement pensions, insurance, and other components of economic well-being has been shifted to individuals during a period of rapidly rising prices,' House said. 'There is so much more to achieve' Many millennials also say it's harder today to make it on their own than it was for their parents when they were starting out. They have higher student loan balances, bigger mortgages and car payments, and more expensive child care costs, explained Sophia Bera Daigle, founder and CEO of Gen Y Planning, a financial planning firm for millennials. 'Cash flow has been tight,' she said. That makes it more difficult to set extra money aside or make long-term plans, said Bera Daigle, a certified financial planner and a member of CNBC's Advisor Council. 'While they are making significant progress on reaching some financial goals, it still feels like there is so much more to achieve.' However, feeling financially secure is often less about how much money you have and more about the ability to spend less than you make, experts say. In part, higher prices have fostered the feeling of being overextended, according to CFP Kamila Elliott, co-founder and CEO of Collective Wealth Partners. Elliott, who is also on CNBC's FA Council, said clients often ask 'Where is my money going?' 'If you feel like a lot of fixed expenses are going up, it may mean you need to cut back on the fun things,' she advised, such as eating out or taking a vacation. 'It's going to take a little bit of an offset to have more money at the end of the month,' Elliott said.
