Inflation has taken quite a toll. Half of Americans say their personal financial situations are worse now than they were a year ago, more than at any time since the Great Recession.
Thats according to a Gallup survey released Wednesday, which asked 1,011 adults in the U.S. about their past and future finances. Not only is this the first time since 2008 and 2009 that at least 50% of Americans report feeling worse off financially than they were a year ago, it is the only time aside from those two years that that many have responded negatively since Gallup first starting asking that question in 1976.
At the same time, 35% of Americans say they are better off now than they were a year ago, and 14% report their finances are the same. Lower-income Americans are more likely than their middle- and upper-income countrymen to report that their financial situation has gotten worse over the past year.
While economists are still torn on whether the U.S. is heading toward a recession and the unemployment rate stands at a 53-year low, it doesnt take a financial expert to elucidate why people might be feeling pessimistic about their pocketbooks. Rising interest rates drove some prospective homebuyers from the market and made credit card debt more expensive; public layoffs at high-profile companies that just last year were hiring at a breakneck speed arent helping matters. There were few winners in the stock market in 2022.
And then theres the cost of living at the heart of everything. Though wages were rising last year, they havent kept up with persistent inflation, which reached the highest rate since 1982. When soaring egg prices become fodder for TikTok memes and jokes at award shows, its safe to say households are feeling the sting. Lower-income households feel the financial strain from rising prices particularly acutely.
Of course, COVID-19 has a significant role to play. Gallup notes that in January 2020, before the pandemic, a record high 59% of Americans reported being better off financially compared to the previous year, almost three times as many as reported being worse off. Post-COVID, many Americans optimism has been understandably dampened.
Its the second poll in recent days that demonstrates the financial pain many Americans are feeling right now. Nearly 40% of Americans said they are in worse financial shape now than when President Joe Biden took office two years ago, according to an ABC News/Washington Post poll released on Sunday.
Despite all of that, Americans are still a pretty positive bunch looking forward: 60% say they expect to be better off financially this time next year, while 28% say they will be worse off, according to Gallups poll.
If this optimism holds and consumers act accordingly, it may help to minimize or avert an economic recession, Gallups report reads.
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