As American economists continue to predict a serious chance of a recession in the second quarter of 2023, new research reveals Americans who make international payments are unbothered: 70 per cent plan to increase or match their 2022 offshore spending, despite the need for home-grown business support for the US economy.
The findings were derived from a survey of an independent panel of 1144 Americans by Money Transfer Comparison, a global comparison website that enables Americans to source the best money transfer rates. The full results, with age and state breakdowns, can be found here: https://moneytransfercomparison.com/usa-info/increase-decrease-payments-2023.html
Among Americans generally make overseas payments, 70 per cent will either increase or continue spending at the same rate this year as in 2022. Specifically, 41 per cent expect to make the same level of overseas payments and 29 per cent will increase their payments. Despite tough economic conditions ahead, only 30 per cent of Americans will make fewer international payments next year.
A recession is traditionally defined by two consecutive quarters of negative GDP. By this definition, the US economy was labeled as in a recession in the summer of 2022, a claim which has been controversial among economists due to the strong labor market that is not typically seen in a recession.However, more American economists have predicted a recession as effectively ‘certain’ in the next 12 months as Federal Reserve Chairman Jerome Powell recently positioned low inflation as a top priority, above low-interest rates.
For the American economy to weather a recession effectively, and return to GDP growth, maintaining high levels of consumer spending will be of great assistance. Despite this, a relatively high proportion of younger Americans – 33 per cent of Generation Z (11-26), 31 per cent of Millennials (27-40) and 29 per cent of Generation X (43-58) expect to increase their overseas payments in 2023. This compares with just 13 per cent of Baby Boomers (59-77) and 0 per cent of the Silent Generation (78-95).
Older generations will continue their international spending at the same rate as in 2022. In fact, two thirds (66 per cent) of Baby Boomers, half (50 per cent) of the Silent Generation and 40 per cent of Generation X will make the same frequency or amount of payments in 2023 as they did in 2022.
Thirty-nine (39) per cent of households making over $100,000 plan to increase their international spending in 2023. More surprisingly, more than a quarter (29 per cent) of low-income households (earning under $50,000) are also planning to increase their international spending, compared with 23 per cent of households bringing in $50,000-$100,000.
Money Transfer Comparison also sought to discover reasons why Americans would make overseas payments this year, and found sending money to family overseas is the most common reason – chosen by more than a third (36 per cent) of respondents. This is followed by purchasing goods and services overseas as a reason (chosen by 34 per cent), pay for international travel (chosen by 29 per cent) and donations to overseas charities (27 per cent). Just 18 per cent will make overseas investments in 2023, and 3 per cent will make overseas payments for an unlisted reason.
Generation X and Z are most likely to spend overseas to purchase goods and services, with an equal 37 per cent choosing this reason. This is followed by 32 per cent of Baby Boomers and 31 per cent of Millennials who will also spend overseas for this reason.
Respondents from the Silent Generation are the most likely to make overseas payments for travel this year (50 per cent). This compares with 37 per cent of Generation Z, 31 per cent of Generation X, 25 per cent of Millennials and 18 per cent of Baby Boomers.
Across household incomes, 39 per cent and 37 per cent of middle-income households ($50,000 – $100,000) and high-income households ($100,000 and over) will make overseas payments mostly for travel this year. This compares to 33 per cent of lower-income households (under $50,000).
Alon Rajic, Founder and Managing Director of Money Transfer Comparison says: “It is clear that many Americans are yet to feel the sting of economic downturn, as the labor market and consumer spending remain strong. If predictions of a recession in mid-2023 come to fruition, we will likely see a shift in international spending at the end of the year, as household budgets tighten.
However, until then, it is positive to see that many Americans are feeling confident with their disposable income, spending overseas, booking international travel, and assisting their families overseas financially.”