From food costs to holiday spending: Americans say they're being pummeled by the economy in dire new poll
Inflation, interest rates, and GDP growth might be valuable historical economic statistics, but they don’t capture the voice of the American consumer in real time. This was the motivation for the Suffolk University Sawyer Business School/USA TODAY national survey of adults on kitchen table issues.
We opened the survey by asking respondents to summarize in a word the state of the economy today. A total of 22% used words like “excellent,” “good,” “growing,” “improving,” “getting better,” “fair,” “average,” and “fine.” That’s more than 1 in 5 feeling pretty good about the economy.
However, nearly 3 in 4 (72%) used words like “horrible,” “terrible,” awful,” “bad,” “poor,” “weak,” “sad,” “dismal,” “crashing,” “struggling,” “disastrous,” “shambles,” “chaotic,” “messy,” “confusing,” “unequal,” “expensive,” “inflation,” “unstable,” “volatile,” “unpredictable,” “anxiety,” “worried,” and “scary.” Those are their words, not ours, and they come from a wide range of demographics, including people at all income levels.
Among all U.S. adults, the results are dire:
70% say the economy is getting worse while 22% say improving
84% say their costs are rising while 4% say falling (not a typo, that’s 4%)
Rising costs seen in 4 categories (food 49%, housing 16%, utilities 11%, auto/gas 11%)
And when it comes to incomes, U.S. households earning under $50,000 – according to their responses − are being pummeled by an economy that is unraveling. They are on an unsustainable path of losing savings, increasing debt, dramatically cutting back daily spending, and are hopeless about the future.
In the poll, we gave respondents a list of seven categories that people spend money on and asked if they could tell us whether or not they are cutting back spending on those items.
It comes as no surprise that in all seven categories a clear majority of lower income households are cutting back on everything: food, clothing, utilities, travel, you name it. Conversely, households earning $100,000 or more are cutting back significantly in only 2 of the 7 categories: restaurants and retail. The survey paints a bleak picture for these two business categories especially, given that all income categories are now cutting back.
Spending cutbacks today mean deep discounts from retailers. Deep discounts mean lower profit margins. Lower profit margins mean lower stock prices. Lower stock prices means expensive borrowing, maybe layoffs, and possible business closures. You get the picture.
When it comes to holiday shopping over the next couple of months, 50% of those lower income households say they will spend less this year, compared to just 38% of those making over 100k. The holidays won’t be so happy for these folks who will feel down about not being able to spend as much as last year.
More of the <50k households reported receiving stimulus money during the pandemic than those making over 100k (60% vs 44%) and of those who received money 75% of the lower income households said that the aid was “very/somewhat important” compared to less than half of those making over 100k. Understandably, stimulus money means more to those who have less.
Today’s perception of the economy in the poll is describing a kind of “binary-nomics,” between the haves and the have-nots, and the striking contrast of realities facing these two broad income levels every day.
As if lower income families didn’t have enough to deal with right now, we also discovered that these respondents self-identify as having more members of their family with an addiction problem like drugs, gambling, alcohol, or online gaming (under 50k (24%), 50-100k (18%), over 100k (14%). How can these lower-income families help relatives who are struggling with addiction when they can’t even put bread on their table?
From a policy standpoint, one possible solution could be a narrowly targeted stimulus package to those earning less than $50,000 per year. But critics will say that’s inflationary even though more lower income households will become food insecure or even homeless and the pressure on local communities, churches, and charities to meet their needs will be intense. And how does President Joe Biden attempt to advocate for fiscal stimulus with a Congress that is now hell bent on impeaching him?
If a fiscal solution is not in the cards, there is also the Fed decision next week. The poll shows a heavy foot already on the brakes of spending – not a screeching halt, but a heavy slowdown - that suggests a rate pause (not an increase) is a more responsible monetary approach. You don’t need another rate hike to slow down a slowing economy. In fact, the possibility of rate cuts should be put back on the table – and real soon.
This article originally appeared on USA TODAY: Holiday spending, food costs: Americans are struggling, new poll shows
