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Americans continue to point to inflation as the main financial problem
WASHINGTON, DC – For the third year in a row, the percentage of Americans who consider inflation or the high cost of living to be the most important financial problem facing their families has reached a new high. The 41% who named the issue this year represents a slight increase from 35% a year ago and 32% in 2022. Before 2022, the highest percentage mentioning inflation was 18% in 2008. Inflation was cited by less than 10% in most other readings. since the question was first asked in 2005.
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The latest results are from Gallup’s annual Economics and Personal Finance survey, conducted April 1-22.
Gallup has asked Americans at least annually since 2005 to name, without prompting, the top financial problem facing their families. Inflation has topped the list for the past three years. The cost of owning or renting a home ranks second this year at 14%, a new high for this issue.
Other significant problems identified by Americans include excessive debt (8%), healthcare costs (7%), lack of money or low wages (7%), and energy costs or gas prices (6%).
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Over the past 19 years, health care costs and lack of money or low wages have often ranked near the top of the list, while the cost of energy or gas has done so during periods of high gas prices. , as in 2005, 2006 and 2008.
Inflation named most frequently by all subgroups
Inflation is considered the most important financial problem by all major social subgroups, but receives higher mentions from certain age, income and political groups.
- 46% of older Americans (those 50 and older) mention inflation, in contrast to 36% of younger Americans (those under 50).
- Inflation is a more important concern for middle-income (46%) and upper-income Americans (41% of those with an annual household income of $100,000 or more) than it is for lower-income Americans (31% of those with annual household income of US$100,000 or more). a household income of less than US$40,000).
- 56% of Republicans, compared to 39% of independents and 26% of Democrats, consider the issue to be the most important financial problem facing their families.
Younger and lower-income Americans may be less likely to mention inflation than their counterparts because other immediate financial concerns are more pressing for them. For example, 21% of adults under age 50 say housing or rent costs are their top concern, compared to 8% of people age 50 and older.
Lower-income Americans are more likely than high- and middle-income Americans to say that personal debt, healthcare costs, lack of money and job loss are the top concerns facing their families.
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Retirement and medical emergencies are also concerns
A separate survey question asks Americans to say how much they care about each of eight specific personal financial issues. Inflation is not one of those issues, but its influence is evident in the high percentage who worry about not being able to maintain their standard of living. Fifty-five percent are very or moderately concerned about maintaining their living standards, marking the third year in a row that the majority have done so, after falling below that level between 2017 and 2021.
Since the question was first asked in 2001, an average of 47% of US adults, including a high of 58% in 2011, have been concerned about maintaining their standard of living.
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Maintaining a standard of living is one of the three economic issues Americans worry about most, along with not having enough for retirement and being unable to pay medical bills in the event of a serious illness or accident. The latter two questions have consistently been ranked first or second each year in Gallup polls since 2001.
Less than half of American adults worry about the other five financial issues, including typical medical costs, typical monthly bills, housing costs, paying for children’s college and making minimum payments on credit cards.
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Compared to last year, there were slight decreases in the percentages of concern about medical expenses resulting from a serious illness or accident (from 60% to 56%) and about not having enough money for retirement (from 66% to 59%) . Both questions are now closer to their historical averages, after being slightly above them last year. For the other six financial issues, the percentages concerned about them remain essentially unchanged from the previous year.
As expected, those with a lower household income are more concerned than those with greater resources about almost all of these financial issues. The only exception is offering college to a child, which does not show significant differences by income. Across the eight financial issues, an average of 60% of lower-income Americans express concern, compared to 47% of middle-income Americans and 31% of higher-income Americans.
Most adults with lower incomes worry about six of eight financial issues, compared with three issues for adults with average incomes and just one for those living in higher-income households.
The biggest disparity of concern on any issue across income groups is the ability to pay standard monthly bills, which concerns 67% of lower-income adults but only 21% of higher-income adults.
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Personal finance rankings remain subdued
Forty-six percent of Americans rate their personal finances as excellent or good, similar to what Gallup has measured over the past two years, but with a worse rating than from 2017 to 2021. Meanwhile, 36% describe their finances as as “just reasonable”, while 17% describe their finances as “fair”. % classifies them as “poor”.
Americans’ assessments of their personal financial situation were worse than they are now between 2009 and 2012, when the US was emerging from the Great Recession and unemployment was high. During those years, an average of 42% of Americans rated their personal finances positively.
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All income groups remain less positive about their current financial situation compared to 2021. Currently, 72% of higher-income Americans, 42% of middle-income Americans, and 25% of lower-income Americans rate their situation as excellent or good.
Another survey question shows that 62% of Americans say they have enough money to live comfortably, similar to the 64% recorded last year but down from 2022 (67%) and 2021 (72%). Gallup has only had a lower reading on this question since 2002 – 60% in 2012. The high point was 75% in 2002, the first year the question was asked.
Eighty-three percent of high-income adults, 62% of middle-income adults, and 37% of lower-income adults say they have enough to live comfortably, with similar declines in each group since 2021.
Americans a little more optimistic, their financial situation is improving
There has been a slight increase in the percentage of Americans who say their financial situation is improving – 43% say this, up from 37% in 2022 and 2023. The current number is still significantly below the 52% measured in 2021.
At the same time, 47% say their financial situation is getting worse, an increase of 17 percentage points since 2021.
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A slight majority of high-income Americans, 52%, believe their financial situation is improving, as do 43% of middle-income Americans and 34% of lower-income Americans.
Conclusion
Inflation continues to be a problem for Americans and is likely the reason why less than half are positive about their financial situation. In addition to being identified as the most important financial problem that the family faces, inflation also appears as one of the domestic problems Americans care more. The question only follows immigration, government, and the economy in general when Americans are asked to name the most important problem faces the country.
The US inflation rate has declined significantly since its peak in 2022, but that has done little to change Americans’ perception of their finances. This may reflect the cumulative effect of higher prices in recent years and the fact that inflation remained above the lowest rates in the US between 2012 and 2020. The latest government reports suggest that inflation may be rising again. This news convinced the Federal Reserve to postpone the interest rate cuts it was expected to make this year.
The issue is also expected to be a key election issue, and renewed inflation would hurt President Joe Biden’s re-election chances.
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