One thing I want to zero in here is the age that I pointed out. PRAS SUBRAMANIAN: Greg McBride, thanks so much.ĭAVE BRIGGS: It's interesting, Pras. You'd keep a close eye on your budget, watch your spending, and then boost your emergency savings so that you can weather whatever might come economically.
#Worried inflation are optimism. how to
And I think those are really the three pillars that, if we were going to talk about how to insulate your finances from an economic downturn, that's where you would start. Budgeting their spending better was second, and saving more for emergencies was third. But I think the goals that people have laid out really I think are indicative of the economic environment. That's often one of the biggest regrets that people have financially. GREG MCBRIDE: Yeah, this was interesting because what we normally see is a lot of, for example, prioritizing about saving for retirement.
SEANA SMITH: Greg, how has all of this shaped financial goals next year just in terms of what people are willing and maybe not willing to spend their money on over the next several months? And, of course, when you look at baby boomers either in retirement or nearing retirement, the prospect of inflation when you're on a fixed income, I mean, that's really your worst enemy, and we certainly see that reflected in the numbers. When we look at Gen Xers and baby boomers, they were much more likely to have a pessimistic outlook on their finances next year, and that's where inflation really reared its head. We noticed among the Gen Z and the millennials was, you know, a greater propensity not only to be optimistic about their finances but because they felt like they were going to make more money at work. I mean, what we did see is a much higher level of optimism among Gen Z and millennial workers relative to their Gen X or Baby Boomer counterparts, and the reasons for feeling that way were also different. And, Greg, I mentioned the racial gap also different generationally. And, you know, that certainly contributes to the level of pessimism that you're seeing in this poll.ĭAVE BRIGGS: No question. Buying power of households is being squeezed. The pace of wage growth that we've seen is the best in 20 years, but you don't notice it because it's just being totally swamped by inflation. GREG MCBRIDE: Yeah, we had done a poll on this a couple of months ago, and what we had found is that most people said that- even those that had gotten raises- it wasn't keeping up with inflation, and I think that really just kind of sums up the state. Do you think most Americans are expecting a pay hike next year, or are they expecting to see higher wages come through? So those were the other common reasons but, you know, by quite a distant margin relative to inflation. The Fed is still signaling they're going to raise rates more. Of course, interest rates have gone up dramatically this year. GREG MCBRIDE: To a much lesser extent, they were singling out work done by elected representatives, stagnant wages or reduced income, which could be a nod to a potential downturn or a recession next year, and changing interest rates.
Outside of inflation, what are consumers- what are Americans most worried about? SEANA SMITH: Greg, you mentioned inflation being the primary reason for that gloomy outlook. So seeing that higher level of optimism I think is certainly encouraging. One of the things you hear Fed Chair Jerome Powell talk about again and again is closing the gap between various racial groups in terms of things like unemployment and income levels. GREG MCBRIDE: Yeah, that was very surprising but, you know, I think encouraging at the same time. And, of course, it's strained and stressed household budgets in 2022, but very clearly there's not a whole lot of optimism on the part of consumers that they feel that's going to improve in any meaningful way next year.ĭAVE BRIGGS: A number of disparities, really interesting numbers- in particular, the racial gap here, Greg, and Black Americans are far more optimistic than are whites, 32% to 15%. When we ask people why do you not feel your finances are going to improve next year? by more than a 2 to 1 margin over anything else, people singled out inflation. Joining us now for more is Greg McBride, 's chief financial analyst.
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