Survey shows Americans still financially confident despite inflation woes

And now a brief word from those Americans seeing the glass half full.

Although inflation is chipping away at consumer confidence, as well as workers' ability to save for retirement, a majority (62%) of adults still report overall confidence in their ability to achieve their financial goals, according to a survey released this week by New York Life. 

To be fair, the most recent figure is down from an average of 69% when compared to the beginning of the year. But it is still a majority, even if the trend is admittedly heading in the wrong direction.

When the respondents were asked to describe how they feel about their finances, 30% admit to being “uncertain,” while 29% say they are “anxious.”

That said, once again from the bright side, nearly 1 in 3 (28%) are “hopeful,” according to the survey, which is nothing to sneeze at, even if nearly 2 in 5 (39%) were “hopeful” at the beginning of 2022.

“Americans are certainly factoring the economic environment into their short-term financial strategies by cutting back on discretionary spending. Fortunately, we are still seeing many adults maintain current financial habits over the last couple of months, including investing in the stock market and spending on home renovations,” Aaron Ball, senior vice president at New York Life, said in a statement.

Overall, the study showed that despite declining confidence, finances remain relatively strong and most people have reported a recent financial “bright spot.”

For example, the survey showed that more than half (59%) of adults have experienced recent financial bright spots, including paying off debt (19%), going on or arranging vacation (18%), and contributing to savings or emergency funds (17%).

Furthermore, though confidence has declined since January, a majority (64%) of adults expect their retirement savings to last their whole lives, according to the study.

The removal of those arguably rose-colored glasses, however, does reveal an increase in financial worries among respondents, primarily short-term ones, over the past few months.

Three-quarters of those surveyed report that inflation has affected either their short- or long-term financial strategies, and nearly 9 in 10 adults (89%) are concerned about a potential economic recession in the U.S. Respondents said their current concerns include paying for daily expenses like groceries and gas (39%), monthly bills (36%), and personal financial emergencies (24%).

Finally, survey respondents also reported drawing an average $616.73 from their savings to cover higher everyday costs.

“Inflation has been hurting the lower income consumer, leaving less room in the household budget for discretionary items," said Joy Budnik, an investment adviser with Jackson Square Capital. "We see this in earnings reports for retailers like Walmart. I would argue the people inflation is hurting the most aren’t the people who have the luxury of thinking in terms of financial goals, because they are in survival mode.”

“Americans are struggling to save again, savings rates have fallen below pre-pandemic averages," said Patrick Gainer, president and private wealth manager at Granite Bay Capital Management at at Kingswood US. "If you want to keep your household budget and retirement on track, your savings rate is the most important factor. By definition, the more you spend the less you save. Savings are what is left over after you spend. As your savings decline you may need to work longer or take greater investment risk to meet your budgeted goal for retirement.”

Added Gainer: “On a brighter note, news from the Bureau of Economic Analysis/Haver Analytics showed in June personal income rose 0.6%. Private sector wages and salaries led the way — 0.5% in June —compared to last year, personal income is up 5.7%.”

So at least Americans have got that going for them. Which is nice.