US personal finance valuations fall amid rising prices

The main points of the story

  • 46% rate personal finances positively, down from 57% last year
  • Inflation is by far the biggest financial problem
  • Half say gas prices have caused suffering; Most expect it to be temporary

WASHINGTON, DC – Far fewer Americans now than a year ago rate their financial situation positively and more say their financial situation is getting worse than they say they are getting better. The standard percentage points to inflation as the biggest financial problem their family faces. Meanwhile, about half say recent gas price increases have caused their families to suffer, far less than what Gallup has measured in other times of higher fuel prices. The weak reaction to higher gas prices may reflect that Americans expect these changes to be temporary rather than permanent.

These results are from the annual Gallup Poll of Economics and Personal Finance, conducted April 1-19.

Americans are more pessimistic about their finances

And 46% of American adults, down from 57% last year, rate their financial situation as “excellent” or “good.” The current number is the lowest since 2015, although somewhat better than the low points of the trend recorded between 2009 and 2012 when 41% rated their finances favorably.

In addition, 38% of Americans describe their financial situation as “only fair,” while 16% say it is “poor.” The latter figure is nearly double last year’s 9%, albeit just below the 19% who said so in 2009 and 2010.

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Meanwhile, 37% of Americans say their financial situation is improving and 48% say it is getting worse, a reversal from last year when a majority said their financial situation is improving. The current numbers are similar to what they were in April 2020 During the early stages of the coronavirus pandemic as well as during the Great Recession of 2008. In most years, the question was asked, Americans were optimistic rather than pessimistic about the course of their finances.

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Americans of all income groups rate their finances less favorably than last year. Each major income group shows a decline of between eight and 14 percentage points in positive evaluations of their current financial conditions. The decrease in the percentage of middle-income Americans who say their financial situation is improving is about half of what it is among low- and high-income Americans.

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A separate question in the survey found a more stable and less pessimistic assessment of personal financial situation – 67% of Americans reported having enough money to live comfortably, down slightly from 71% last year. The percentage of those who reported being financially comfortable has varied little since 2013, ranging from 66% to 71%. The obvious deviation in the trend was a reading of 60% in 2012. However, before the Great Recession, seven in 10 said they had enough money to live comfortably.

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Inflation is behind the growing financial problems

Americans cite inflation as the most important financial problem facing their families today, with 32% citing it in response to an open question. That compares to 8% last year and is nearly double the previous high of 18% for inflation in 2008.

In addition to inflation, 10% of Americans refer to energy costs or gas and oil prices. References to gas prices were last above these levels in 2012 (11%) and were as high as 29% in 2008. Very few Americans reported between 2014 and 2021 that energy costs/gas prices were the most difficult financial issue for them. for them.

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Inflation is the biggest concern this year among Americans in all income groups, but it is mentioned more often by higher-income families (37%) than by middle-income (32%) or lower-income families (27 %). There are no significant differences by income category in the mention of energy costs.

Other common personal financial concerns this year among US adults are lack of money or low wages (11%), the costs of owning or renting a home (8%), health care costs (7%), and too much debt (7%). health care costs And the lack of money is usually near the top of the list.

Gas prices are causing hardship to nearly half in the United States

Fifty-two percent of Americans say recent increases in gasoline prices have caused financial hardship for their families. Gallup has asked this question in the past when gas prices were rising. More Americans said they took more financial damage from gas price increases in 2005, 2008 and 2011 than they say now. The highest points were 72% in September 2005 and 71% in May 2008.

Americans are now more likely to say higher gas prices are causing them financial hardship than they were in 2000, 2001, 2003, 2004 and 2018.

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One in seven Americans – 14% – say gas prices have caused “extreme suffering” for their families. This includes more than one in four adults in the United States who live in low-income families (26%).

Overall, 70% of low-income Americans say gas prices are causing them either severe or moderate financial hardship. This compares with 51% of middle-income Americans and 35% of those who live in high-income families.

Most believe that gas price increases are temporary

Typically, Americans were less likely to say they were cash-strapped from higher gas prices if they believed the gas price increases were temporary rather than permanent. Currently, 57% expect increased gas prices to be a temporary change, while 42% expect them to be permanent. In other times of rising gas prices, most notably in 2008, a majority believed that rising gas prices were permanent and were more likely to say they were in cash as a result.

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In the current survey, 40% of Americans who think gas prices are temporary say the increases are causing them financial hardship. Among those who think price changes are permanent, 66% said it was stressful financially.

Republicans are one of the rare subgroups that expect gas price changes to be permanent. A majority of 57% of Republicans say so, but 55% of Independents and 75% of Democrats expect the rate increases to be temporary.

Ramifications

The past two years have brought a series of economic challenges to the United States, including a widespread economic shutdown, high unemployment and a recession early in the pandemic. While the economy has since recovered, the rapid pace of recovery, high consumer demand for products, a tight labor market and supply chain issues contributed to the highest inflation in four decades.

Nearly a third of Americans consider inflation the most important financial problem for their families, and half say high gas prices are causing them financial hardship. These issues appear to be negatively affecting Americans’ financial outlook, with fewer Americans rating their situation positively than it did a year ago, and more saying the situation is getting worse.

Current personal finance ratings are similar, if not worse, than they were amid widespread economic shutdowns two years ago at this time. The fact that more people expect gas price increases to be temporary, perhaps attributable to the war between Russia and Ukraine, or more generally, to past gas price increases that eventually subside, may prevent Americans’ assessments of their finances from getting any worse. who they are.

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