Inflation remains a key risk and consumers still say it’s their biggest challenge

Middle-income American households remain cautious about their personal finances amid inflation concerns, as revealed in two separate recent surveys.

Almost nine in ten respondents told a Santander US poll that inflation has impacted their daily lives and 81% say it’s more of a concern in the third quarter of 2024 than it was in the previous three month period.

Despite the pressure, most said they are keeping on top of their bills and 71% believe they are more on track to financial prosperity than they were a year ago. Most said they have reduced retails spending in response to price rises.  

However, another survey from Primerica reveals that most middle-income households say they are more worried about their personal finances in Q3 than they were in the previous quarter along with concern about their savings ability and the economic health of their communities.

The firm’s Financial Security Monitor shows that 55% of respondents rate their personal finance situation negatively, six points higher than in the Q2 survey with inflation ranking as the top concern, even before the CPI print showed an unexpected uptick for September.

“For the first time in a year, a majority of middle-income households are feeling negative about their personal finances. In fact, this latest report represents the highest negative rating we’ve seen since we began fielding the survey exactly four years ago,” said Glenn Williams, CEO of Primerica.

Primerica’s research found increased credit card debt among 35% of respondents over the last quarter and 44% say they are worried about the amount of debt they hold on cards.

RECESSION RISK?

While inflation is the main concern, the Santander poll also shows anxiety around a US economic downturn with 62% of respondents feeling that the economy is headed to recession in the next year, although two thirds do not expect it to be in the last three months of 2024.

That said, the report shows an improvement in confidence for consumers, largely due to their own actions.

“Consumers continue to take actions to manage their finances and navigate economic stressors,” said Tim Wennes, CEO of Santander US. “Their ability to make necessary budget decisions to remain current on their bills and manage the overall economic uncertainty over the past few years has helped to boost their confidence. Looking ahead, I expect to see these behavioral changes lead to fundamental shifts in consumers’ financial priorities.”