First with the coronavirus pandemic and now with inflation high for decades, Americans haven’t been able to pause for two and a half years when it comes to the US economy – and a majority are delaying the events of the life because of it.
More than half of adults (or 53%) have delayed a major financial step due to the state of the economy, while 58% have avoided activities or events, according to a new Bankrate poll. It comes as a further 57% say their quality of life has been negatively affected by the economy.
Inflation on basic necessities, including food and gasoline, is straining Americans’ purchasing power, and their incomes are struggling to keep pace.
Nor are these price pressures the only factor limiting consumers’ purchasing power. Rapid rate hikes by the Federal Reserve have pushed up the costs of financing major purchases at an unprecedented rate. This spurred a rapid affordability crisis, especially for homes and cars. It has also hurt the wealth of many Americans amid rapidly falling stock, bond and house prices.
Whether it’s inflation, rising interest rates, recession fears, market volatility or something similar, worries about the economy are high. The prevailing sentiment is that the state of the economy has had a negative impact on Americans’ quality of life over the past year.
—Greg McBrideCFA, Chief Financial Analyst at Bankrate
Key points to remember
- More than half of adults (or 53%) have delayed a major financial step because of the economy, most often home improvements or renovations (25%), buying or leasing a car (21 %) or the purchase of a house (15%).
- Almost 3 in 5 people (or 58%) chose not to participate in activities or events due to the economy, most likely taking a vacation (37%); dining out with friends or family (28%); going to an amusement park, zoo, aquarium or other attraction; or attending artistic events such as concerts and plays (21%).
- More than half (or 57%) say their quality of life has been negatively affected by the state of the economy, including 22% who say they have been very negatively affected.
- Americans whose quality of life has been negatively impacted are significantly more likely to have delayed major financial milestones (62%) or activities (67%) than those who were or were not positively impacted (43% and 46%, respectively).
More than half of adults have delayed a major financial milestone because of the economy
The major financial milestones that Americans most often say they are delaying because of the economy are undoubtedly tied to this massive increase in interest rates. These include:
- Home improvements or renovations (25%);
- Buy or rent a car (21%); and
- Buy a house (15%).
Yet others say the economy even affects personal decisions, such as:
- Getting married (7%) and
- Having children (7%).
Another 10% say they have decided to delay furthering their education, while 7% have put off pursuing a career advancement. And at a time when the S&P 500 is down nearly 18% since the start of the year, another 9% say they have postponed retirement.
Millennials (64%; ages 26-41) are especially likely to have delayed a major financial milestone due to the economy, with 26% saying they’ve put off buying a home. This compares to 55% of Gen Z (ages 18-25) who report delaying at least one step, as well as 54% of Gen X (ages 42-57) and 46% of baby boomers (aged 58 to 76). .
Meanwhile, younger generations (Gen Z and Millennials, at 14% and 12%, respectively) are more than twice as likely as their older Gen X (5%) and Baby Boomer (1%) counterparts. to say that they have delayed their attempts to move forward. in their career.
Americans earning $100,000 or more per year were slightly more likely (at 58%) to have delayed one or more financial milestones than households earning between $50,000 and $99,999 (at 55%) and others earning less $50,000 per year (54%).
Just under half of Americans (or 47%) say the economy hasn’t caused them to delay a major financial milestone because of the economy.
Nearly 3 in 5 people chose not to participate in activities or events due to the economy
The US economy doesn’t just prevent Americans from making important financial decisions that could further their opportunities for wealth creation. Consumers are also avoiding socially rewarding activities or events, which they have often lived without during the coronavirus pandemic.
- Take a vacation that involves an overnight stay for leisure (37%);
- Dinner with friends or family (28%);
- Going to an amusement park, zoo, aquarium or other attraction (22%);
- Attending live artistic events, such as concerts or plays (21%);
- Go see a movie at the cinema (21%); and
- Go to a professional sporting event (17%).
Even as the economy pushes consumers to delay vacations, travel emerging from the pandemic has still skyrocketed. TSA records between Aug. 31 and Sept. 6, for example, even eclipsed pre-pandemic levels in 2019, according to the Transportation Security Administration. That massive demand has helped push airline prices up nearly 43% from a year ago, according to the Labor Department.
“Revenge spending in travel has been particularly robust, with flights sold out and hotels sold out,” McBride says. “But how much stronger could it have been? It is usually the first discretionary expense to be cut when households worry about the economic path forward. »
Gen Z and Millennials (at 64% and 66%, respectively) were more likely than their older Gen X and Baby Boomer counterparts (at 59% and 50%, respectively) to have chosen not to not participate in at least one activity or event in the past year.
And while higher-income Americans were more likely to delay major financial milestones, the reverse was true with business. Households earning less than $50,000 per year were the most likely to say no to an activity (61%), compared to 58% for households earning between $50,000 and $99,999 per year and 55% for those earning $100,000. $ or more.
More than half say their quality of life has been negatively affected by the state of the economy
Considering the majority of Americans who say the state of the economy has had a negative impact on their quality of life, more than 1 in 3 (or 34%) say it has been somewhat negatively affected, while more than 1 in 5 (or 22%) say they have been very negatively impacted, according to the Bankrate poll.
Only 1 in 8 (or 12%) say the economy has had a positive impact on their life, with 5% citing a very positive impact and 7% citing a somewhat positive impact.
Almost a third (or 31%) say the economy has had no positive or negative effect on their well-being.
Americans who were negatively impacted are more likely to delay activities (at 67%) or milestones (at 62%) than those who were positively or neutrally impacted (at 46% for activities and 43% for milestones) .
Nearly half of negatively impacted Americans postpone their vacation (49%), more than twice as many as those who were positively or neutrally impacted (21%). Those who were negatively impacted were also twice as likely to delay buying or leasing a car (27%) and make home improvements (33%) than those who were positively impacted. or neutral (14% and 15% for the two respective milestones).
The economy was more likely to have a negative impact on women’s quality of life than men’s (at 60% and 53%, respectively). Meanwhile, middle-income households earning between $50,000 and $99,999 a year (at 62%) were the most likely to say they had been negatively affected. This compares to 55% for those earning less than $50,000 per year and those earning $100,000 and more per year.
Low-wage positions have seen some of the largest wage increases after the pandemic-induced recession, with employers facing labor shortages in key retail and food service sectors. Meanwhile, wealthier households owning assets such as homes and stocks have thrived during the pandemic amid the Fed’s massive efforts to prop up the financial system.
Wealth remains above pre-pandemic levels, even despite falling stock prices this year, according to the Fed’s June 2022 monetary policy report.
Still, a substantial majority say they’ve taken a hit – no doubt linked to rapidly rising prices affecting the necessities consumers need most, from food and gasoline to electricity. electricity and housing.
“The pervasiveness of price increases remains problematic,” McBride says. “Any meaningful relief for household budgets is still somewhere on the horizon. Inflation has been much higher for much longer than expected and we have yet to have a winning streak.
Bankrate.com has commissioned YouGov Plc to conduct the investigation. All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 2,442 adults. The fieldwork was undertaken between October 19 and 21, 2022. The survey was conducted online and met rigorous quality standards. It used a non-probability sample using upstream quotas during collection and then a downstream weighting scheme designed and tested to provide nationally representative results.