US Personal Finance Ratings Fall Amid Rising Prices

Story Highlights

  • 46% rate personal finance positively, up from 57% last year
  • Inflation, the biggest financial problem by a wide margin
  • Half say gas prices caused difficulties; most expect them to be temporary

WASHINGTON, DC — Far fewer Americans now rate their financial situation positively than a year ago, and more say their finances are getting worse than they say they are getting better. A record percentage cite inflation as the biggest financial problem facing their family. Meanwhile, about half say recent gas price increases have caused their family hardship, well below what Gallup has measured during other times of rising fuel prices. The subdued reaction to gasoline price hikes may reflect Americans expecting those changes to be temporary rather than permanent.

These findings come from Gallup’s annual survey of the economy and personal finance, conducted April 1-19.

Americans are more pessimistic about their finances

Forty-six percent of American adults, up from 57% last year, rate their financial situation as “excellent” or “good.” The current figure is the lowest since 2015, though somewhat better than the trend lows seen between 2009 and 2012, when just 41% rated their finances positively.

Additionally, 38% of Americans describe their financial situation as “fair,” while 16% say they are “poor.” This last figure is almost double the 9% of last year, although slightly lower than the 19% who said it in 2009 and 2010.

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Meanwhile, 37% of Americans say their financial situation is improving and 48% say it’s getting worse, a change from last year, when most said their finances were improving. The current numbers are similar to what they were in April 2020 during the early stages of the coronavirus pandemic, as well as during the Great Recession in 2008. In most years the question has been asked, Americans have been bullish on place of pessimists about the trajectory of their finances

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Americans in all income groups rate their finances less positively than they did last year. Each major income group shows an eight to 14 percentage point decline in positive assessments of their current finances. The decline in the percentage of middle-income Americans who say their financial situation is improving is about half that of low- and high-income Americans.

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A separate question in the survey finds a more stable and less pessimistic assessment of personal finances: 67% of Americans report they have enough money to live comfortably, down slightly from 71% last year. The percentage reporting that they are financially comfortable has changed little since 2013, ranging from 66% to 71%. The clear outlier in the trend was a reading of 60% in 2012. However, before the Great Recession, seven in 10 said they had enough money to live comfortably.

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The inflation behind the growing financial problems

Americans cite inflation as the most important financial issue facing their families today, with 32% citing it in response to the open-ended question. That compares with 8% a year ago and is nearly double the previous high of 18% nominal inflation in 2008.

Beyond inflation, 10% of Americans cite energy costs or oil and gas prices. Gas prices were last mentioned as high in 2012 (11%) and as high as 29% in 2008. Very few Americans between 2014 and 2021 said energy costs/gas prices were their most challenging financial issue .

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Inflation is the top concern this year among Americans in all income groups, but it is mentioned more often by high-income households (37%) than either middle-income (32%) or low-income households (27%). ). There are no significant differences by income group in the mentions of energy costs.

Other common personal financial concerns this year among American adults are lack of money or low wages (11%), costs of owning or renting a home (8%), health care costs (7%) and excess of debts (7%). Health care costs and lack of money typically rank near the top of the list.

Gasoline prices cause hardship for about half in the US.

Fifty-two percent of Americans say recent increases in gasoline prices have caused financial hardship for their households. Gallup has asked this question in the past when gas prices were rising. Significantly more Americans said they were being hurt financially by rising gasoline prices in 2005, 2008 and 2011 than now. The high points were 72% in September 2005 and 71% in May 2008.

Americans are more likely now to say that higher gas prices are causing them financial hardship than they were in 2000, 2001, 2003, 2004 and 2018.

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About one in seven Americans, 14%, say that gas prices have caused “serious hardship” for their household. This includes more than one in four American adults who live in low-income households (26%).

Overall, 70% of low-income Americans say that gas prices are causing them moderate or severe financial hardship. That compares to 51% of middle-income Americans and 35% of those in high-income households.

Most Believe Gas Price Hikes Are Temporary

Americans are generally less likely to say they are experiencing financial hardship due to higher gas prices if they believe that increases in gas prices are temporary rather than permanent. Currently, 57% predict that rising gas prices will be a temporary change, while 42% expect it to be permanent. In other times of rising gas prices, most notably in 2008, most believed that gas price increases were permanent and were more likely to say they were experiencing financial hardship as a result.

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In the current poll, 40% of Americans who think gas prices are temporary say the increases are causing them financial hardship. Among those who believe the price changes are permanent, 66% say they have been financially burdensome.

Republicans are one of the rare subgroups who expect gas price changes to be permanent. A 57% majority of Republicans say so, but 55% of independents and 75% of Democrats expect the price increases to be temporary.

Transcendence

The past two years have brought a series of economic challenges for the US, including widespread economic lockdowns, high unemployment, and a recession early in the pandemic. While the economy has since recovered, the accelerated pace of the recovery, high consumer demand for products, a tight labor market, and supply chain issues have all contributed to the highest observed inflation rates. in four decades.

Nearly a third of Americans cite inflation as the most important financial problem for their family, and half say higher gas prices are causing them financial hardship. These problems appear to be affecting the financial outlook of Americans, with fewer Americans rating their situation positively than a year ago and more saying it is getting worse.

Current personal finance ratings are similar to, if not worse than, what they were amid widespread economic shutdowns two years ago at this point. The fact that more people expect gas price increases to be temporary, perhaps attributing them to the war between Russia and Ukraine or, more generally, to past gas price increases eventually back down, it may be preventing assessments of Americans’ finances from being even worse than they are.

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