First with the coronavirus pandemic and now with decades-high inflation, Americans for two and a half years haven’t been able to catch a break when it comes to the U.S. economy — and a majority are holding off on life events because of it.
More than half of adults (or 53 percent) have delayed a major financial milestone due to the state of the economy, while another 58 percent have avoided activities or events, according to a new Bankrate poll. That comes as another 57 percent say their quality of life has been negatively impacted by the economy.
Inflation on everyday essentials, including food and gas, is weighing on Americans’ purchasing power, and their earnings have struggled to keep pace.
Those price pressures also aren’t the only factor limiting consumers’ purchasing power. The Federal Reserve’s rapid rate hikes have pushed up financing costs on big-ticket purchases at an unprecedented speed. It’s spurred a rapid affordability crunch, especially on homes and cars. It’s also harmed many Americans’ wealth amid rapidly declining stock, bond and home prices.
Whether it be inflation, rising interest rates, recession fears, market volatility or something similar, concerns about the economy are high. The overwhelming sentiment is that the state of the economy has had a negative impact on Americans’ quality of life over the past year.– Greg McBride, CFA, Bankrate Chief Financial Analyst
- More than half of adults (or 53 percent) have delayed a major financial milestone because of the economy, most commonly home improvements or renovations (25 percent), buying or leasing a car (21 percent) or buying a home (15 percent).
- Almost 3 in 5 (or 58 percent) have opted out of activities or events because of the economy, most likely taking a vacation (37 percent); dining out with friends or family (28 percent); going to an amusement park, zoo, aquarium or other attraction; or attending live arts events such as concerts and plays (21 percent).
- More than half (or 57 percent) say their quality of life has been negatively impacted by the state of the economy, including 22 percent who say they’ve been very negatively impacted.
- Americans whose quality of life has been negatively impacted are much more likely to have delayed major financial milestones (62 percent) or activities (67 percent) than those who were either positively or not impacted (43 percent and 46 percent, respectively).
More than half of adults have delayed a major financial milestone because of the economy
The major financial milestones Americans most commonly say they’re delaying because of the economy are no doubt related to that massive increase in interest rates. Those include:
- Home improvements or renovations (25 percent);
- Buying or leasing a car (21 percent); and
- Buying a home (15 percent).
Yet, others say the economy is even affecting personal decisions, such as:
- Getting married (7 percent) and
- Having children (7 percent).
Another 10 percent say they’ve decided to delay furthering their education, while 7 percent have pushed off pursuing a career advancement. And at a time when the S&P 500 is down almost 18 percent since the start of the year, another 9 percent say they’ve put off retiring.
Millennials (at 64 percent; ages 26-41) are especially likely to have delayed a major financial milestone because of the economy, with 26 percent saying they’ve put off buying a home. That compares with 55 percent of Generation Z (ages 18-25) who say they’ve delayed at least one milestone, along with 54 percent of Generation X (ages 42-57) and 46 percent of baby boomers (ages 58-76).
Meanwhile, younger generations (Gen Z and millennials, at 14 and 12 percent, respectively) are more than twice as likely as their older Gen X (5 percent) and baby boomer (1 percent) counterparts to say they’ve delayed trying to advance in their career.
Americans making $100,000 or more a year were slightly more likely (at 58 percent) to have delayed one or more financial milestones than households earning between $50,000 and $99,999 (at 55 percent) and others making less than $50,000 annually (54 percent).
Slightly less than half of Americans (or 47 percent) say the economy hasn’t led them to delay a major financial milestone because of the economy.
Nearly 3 in 5 have opted out of activities or events because of the economy
The U.S. economy isn’t just keeping Americans from making important financial decisions that could further their wealth-building opportunities. Consumers are also avoiding socially rewarding activities or events, many of which they lived without during the coronavirus pandemic.
- Taking a vacation that involves one overnight stay for leisure (37 percent);
- Dining out with friends or family (28 percent);
- Going to an amusement park, zoo, aquarium or other attraction (22 percent);
- Attending live arts events, such as concerts or plays (21 percent);
- Going to see a movie in a theater (21 percent); and
- Going to a professional sports event (17 percent).
Even with the economy leading consumers to delay vacations, travel coming out of the pandemic has still boomed. TSA check-ins between Aug. 31 and Sept. 6, for example, eclipsed even pre-pandemic levels from 2019, according to the Transportation Security Administration. That massive demand has helped push prices up on airlines by almost 43 percent from a year ago, according to the Department of Labor.
“Revenge spending in travel has been particularly robust, with full flights and sold-out hotels,” McBride says. “But just how much stronger could it have been? This tends to be the first discretionary expense to get cut when households are queasy about the economic path ahead.”
Gen Z and millennials (at 64 percent and 66 percent, respectively) were more likely than their older Gen X and baby boomer counterparts (at 59 percent and 50 percent, respectively) to have opted out of at least one activity or event within the past year.
And while higher-earning Americans were more likely to hold off on major financial milestones, the opposite was true with activities. Households earning less than $50,000 annually were the most likely to say no to an activity (at 61 percent), compared to 58 percent for households earning between $50,000 and $99,999 a year and 55 percent of those earning $100,000 or more.
More than half say their quality of life have been negatively impacted by the state of the economy
Looking at the majority of Americans who say the state of the economy has negatively impacted their quality of life, more than 1 in 3 (or 34 percent) say they’ve been somewhat negatively impacted, while more than 1 in 5 (or 22 percent) say they’ve been very negatively impacted, according to Bankrate’s poll.
Just 1 in 8 (or 12 percent) say the economy has positively impacted their life, including 5 percent who cite a very positive impact and 7 percent who cite a somewhat positive impact.
Almost a third (or 31 percent) say the economy has neither positively nor negatively affected their well-being.
Americans who’ve been negatively impacted are more likely to delay activities (at 67 percent) or milestones (at 62 percent) than those who’ve been either positively or neutrally impacted (at 46 percent for activities and 43 percent for milestones).
Almost half of those negatively impacted Americans put off a vacation (49 percent), more than two times as many as those who were either positively or neutrally impacted (21 percent). Those who were negatively impacted were also two times as likely to delay buying or leasing a car (27 percent) and making home improvements (33 percent) than those who were positively or neutrally impacted (14 percent and 15 percent for both respective milestones).
The economy was more likely to have a negative impact on women’s quality of life than men’s (at 60 percent and 53 percent, respectively). Meanwhile, middle-income households earning between $50,000 and $99,999 a year (at 62 percent) were the most likely to say they’ve been negatively impacted. That compares with 55 percent for both those earning less than $50,000 annually and individuals making $100,000 and up a year.
Low-wage positions have seen some of the biggest pay bumps after the pandemic-induced recession as employers work through labor shortages in the key retail and food services sectors. Meanwhile, wealthier households with assets such as homes and stocks thrived during the pandemic amid the Fed’s massive efforts to prop up the financial system.
Wealth remains above pre-pandemic levels even despite the drop in equity 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 related to the rapid increase in prices affecting the everyday essentials consumers need most, from food and gasoline to electricity and shelter.
“The pervasiveness of price increases remains problematic,” McBride says. “Any meaningful relief for household budgets is still somewhere over the horizon. Inflation has run far hotter for far longer than expected and we have yet to string together any kind of winning streak.”
Bankrate.com commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 2,442 adults. Fieldwork was undertaken between October 19-21, 2022. The survey was carried out online and meets rigorous quality standards. It employed a nonprobability-based sample using quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.
This article originally appeared here and was republished with permission.