Is Inflation Stressing You Out? If So, You're Not Alone
America has a strong job market going right now. Wages are up and some people are benefitting from COVID stimulus savings.
Well, that's it for the positive economic news. Good night, everybody.
You're probably expecting a little more from me today than those two short paragraphs. So, here goes. The economy is in the toilet. Kingsview Wealth Management Chief Investment Officer Scott Martin referred to it as "terrible."
Inflation is at a 40-year high. Many people are finding it very difficult to make ends meet. The prices of core items including food, shelter, and gasoline have skyrocketed. There's talk about a recession. More than 80% of Americans believe we'll enter a recession this year.
Most Americans Are Cutting Back
Approximately 60% of Americans are living paycheck to paycheck. Many others are retired and on a fixed income. As financial guru Dave Ramsey says, "There's too much month left at the end of the money."
How are we dealing with inflation? A new survey from CNBC and Momentive (formerly SurveyMonkey) finds that we're buying less of whatever we don't consider a necessity.
This problem is not limited to lower-income folks. The survey also revealed that Americans with an income of $100,000 or more are also cutting back.
Unfortunately, those with lower incomes are finding it necessary to cut back on things that higher-income individuals consider staples.
What Are We Cutting Back On?
Breeze is an insurance services company based in Omaha, Nebraska. Their recent study shows that 88% of American consumers have cut their spending as a result of inflation.
A total of 73% of U.S. households have cut back on restaurants and takeout, and 63% on consumer spending.
Another 62% have reduced social spending, 57% have cut back on groceries, 54% on vacations, 44% on gas, and 35% on debt payments.
That groceries statistic is particularly telling. Everyone has to eat. But when you see a headline like Bloomberg News had recently – "Bread at $10 a Loaf Arrives as Inflation Saps Demand for Basics" – you know there's a big problem.
Americans Are Delaying Retiremen
A recent survey by BMO Harris Bank revealed that approximately 25% of Americans are delaying their retirement due to inflation.
Many others who are going ahead with their planned retirement are noticing they don't have as much money as they thought they did.
That's because our money is not stretching as far as it used to. Housing, groceries and gasoline are all taking bigger chunks out of our paychecks than they used to.
Prescription drug prices are also hitting Americans hard. The average person 65 or older takes 4.5 prescription drugs, so the effects are painfully evident.
Brendan Blake is with AARP Arizona. He said, "With inflation and the high cost of prescription drugs and renting a home, people are getting squeezed. Seniors on a fixed income… it's only getting harder and harder to make their way."
Financial Stress Rears Its Ugly Head
It's not the least bit surprising that inflation is causing many of us stress. And as we all know, stress can negatively impact our health.
The CNBC survey also found that 57% of Americans with an income under $50,000 say they are under more stress than they were a year ago. And about 45% of Americans with incomes over $100,000 say the same.
Laura Wronski is a senior manager of research science at Momentive. She said, "People making six-figure incomes are almost as worried about inflation as people making half as much. And they are just as likely to be taking steps to mitigate its effect on their lives.
"Inflation is a problem that compounds over time. Even high-income individuals won't be insulated from the second and third-order effects of price increases."
American Consumers 'In a Dark Mood'
The Breeze study shows that 75% of Americans are worried about providing food for themselves and their families. Ninety-three percent are driving less to save gas money and 87% canceled vacation plans.
More than 60% say they're struggling to pay their rent or mortgage, while 31% say their ability to make payments is "already a serious problem." Seventy-seven percent are canceling some of their health insurance.
More than two-thirds are saying that the state of the economy is affecting their mental health. And 81% say inflation has made them more stressed than usual. Another study reported that money is a source of stress for 90% of Americans.
Mark Zandi, chief economist at Moody's Investors Service, summed it up succinctly. He said, "The American consumer is in a dark mood."
Take Care of Yourselves
Ashley Agnew is director of relationship development at Centerpoint Advisors, a financial planning group in Needham, Massachusetts.
She said, "To say that financial stress impacts health is an understatement. Our relationship with money and our thoughts surrounding finances are big drivers of our health."
With inflation raging and showing no signs of slowing down, clearly it's more important than ever to keep up our physical and mental health to the best of our capabilities.
Eat right, exercise, get plenty of rest and engage in relaxation techniques. We'll get through this, folks, as long as we take care of ourselves.