Today’s economics is squeezing out the middle class.  Citizens of the United States face decisions daily that are impacted by external factors both domestically and internationally.  According to Pew Research Center analysis of government data, “In 1971, 61% of Americans lived in middle-class households; by 2023, the share had fallen to 51%. … Many groups still lag in their presence in the middle- and upper-income tiers. For instance, American Indians or Alaska Natives, Black and Hispanic Americans, and people who are not married are more likely than average to be in the lower-income tier.”  The national debt is at a record high; the number changes every second and it continues to go up and up. But acknowledgment and awareness of difficult conditions do not need to translate into pessimism. 

Figure 1: Government debt

Government debt “crowds out” –
Putting upward pressure on rates

Source: US Treasury, Federal Reserve, Reasons Foundation

The current economic state shown in Figure 1 highlights the trillions of dollars of debt our government has incurred, along with corporate and consumer debt. More than half of the debt is by way of local and federal government. Consumers face day-to-day decisions like when to buy groceries or put gas in the car, concerns about employment and holiday gifting, and uncertainty on how much to save. Based on Raddon research from July 2026, 56% of respondents feel that we are currently in a recession, and over a quarter think a recession is imminent. 

Figure 2: Recession and inflation concerns

Inflation is the top concern for most consumers

Source: Raddon Research Insights, 2026 Economic Sentiments

Financial institutions (FIs) have decisions to make as well. How best should an FI structure products and services to help accountholders? How to plan for competitive deposits when some accountholders are deciding on rates alone where to place their money? How to take care of an institution’s employees during these economic times?

Even during difficult times, we can help consumers with decisions that are within their control. As FIs, we can provide consumers with tools to help them track the money coming in and out of their households; we can also help consumers create a budget to provide more clarity on how to prioritize their finances. Do you have such tools to help your accountholders? Can this tool be accessed via mobile banking, where they can see daily/weekly/monthly transactions easily?

Access to a realistic budget can help consumers know if they have discretionary funds or if they are managing a deficit. As FIs, we can educate our accountholders on different approaches to maintaining and adjusting a budget. When accountholders ask for assistance with their account, ask about their savings goals. If they do not have a savings plan, suggest starting by paying themselves $5 a week via automatic savings; over time, even that small amount adds up. Suggest setting up an automatic transfer in their savings account to help them keep to that resolution.

Deposits can no longer just be held; they must be actively managed. Are you equipped with tools to help your accountholders see real-time suggestions on how best to use their savings? The use of AI in money management will allow for swifter transfer of funds without consideration from any human thought or changing of human’s mind. Rate transparency is shifting from comparison to automation in which AI will monitor savings, recommend action, and increasingly move funds to higher-yield options, raising the bar on retention. Mobile banking supports the faster transfer of funds into higher-yield accounts. Consumers increasingly define their primary FI as the one where they engage and transact daily, making the mobile experience a direct driver of deposit retention and growth.

In a previous article, we pointed out that the older generation is strategically moving wealth before it becomes an inheritance by gifting, down payment assistance, educational support and family financial planning. What plan do you have in place to help support investment knowledge? Are your representatives trained to coach consumers to the right team or product?

Once you have the deposits, you then must decide your risk appetite for loans. If over half of consumers feel like we are in a recession, we have an opportunity to help more accountholders. Calculated risks are involved; should pricing best support those with FICO scores 740 or higher, or should the focus be on how best to support those accountholders with lower FICO scores to give them real grace and meet them where they are? 

Figure 3: Percentage of households that anticipate applying for any loan in the next year,

Highly qualified borrowers express significantly lower demand for loans than other consumers

Source: Raddon Research Insights, 2025 Loans Baseline

Figure 4: Percentage of consumers by credit score range, self-reported versus actual FICO distribution

Consumers’ self-reported credit scores skew more favorably than the actual distribution of scores

Source: Raddon Research Insights, 2025 Loans Baseline

FIs can help accountholders/consumers by evaluating their current financial picture against their short- and long-term goals when they present the need/want to purchase a car or home. Representatives can take on more of an advisory position, helping consumers consider their knowns and plan for the unknowns. Provide guidance with the understanding that consumers will make the final decision. Help them understand the benefits of your suggestions and the risks of doing something different. Below are three recommendations to consider.

1.      Build relationships and maintain trust and professionalism. Your accountholders and consumers require knowledge to help guide them in a world with so much information to consider. By asking the tough questions now, FIs can prepare to help their accountholders weather economic uncertainty, make informed decisions and take calculated risks when it comes to savings, investing and borrowing.

2.      Invest in and upgrade digital tools. Digital banking tools are a requirement to stay competitive. Assess your online platform’s strengths, and if there are any opportunities, prioritize them.

3.      Prepare for AI agents. Consider the risks of both using them and opting not to.

Financial institutions should help accountholders/consumers understand how much risk they can comfortably take to maintain financial resilience during a downturn. Reassure them by having products and services available to move forward when the opportunity is best for both the accountholders/consumers and the institution.