Inflation has Americans pressing pause on life events
American consumers have put their lives on hold as financial pressures from rising prices are felt across all generations. For some, sacrifices may include driving less while others are having to postpone starting a family or getting married.
Since last October, prices of goods and services have exceeded a 5% increase on a year-over-year basis. Higher inflation leads consumers across generations to make difficult decisions with their money and savings that impacts their lifestyles and futures.
A new consumer study by the Nationwide Retirement InstituteÒ revealed that 90% of American consumers are concerned about inflation, leading to an overall grim outlook on the U.S. economy.
“Following months of decades-high inflation, the war between Russia and Ukraine is intensifying inflationary pressures, worsening supply chain snarls, and spiking gas prices. It’s understandable that consumer sentiment is very low right now,” said Mark Hackett, Nationwide’s Chief of Investment Research.
Declining purchase power has led all generations to make the tough decision to postpone or cancel major life events. Over one-third of Gen Z and Millennials have already postponed or are considering postponing their weddings and plans to start a family. Consumers are also more likely to delay buying a car or home and have cancelled their vacations. For older generations, more than 10% near retirement age have or are considering postponing plans to retire.
In addition to these cancelled or postponed major life events, all are making changes in their daily lifestyles to combat inflation. This includes:
- Eating out less (48%)
- Driving less (35%)
- Relying more on credit cards (21%)
- Looking for a better paying job (19%) – higher for Gen Z at 32% and millennials at 30%
- Moving in with family to save money (14%) – higher for Gen Z at 30% and millennials at 21%
- Reducing contributions to their 401(k) (10%)
Regardless of the trade-offs families and individuals are making, they are still feeling the effects of inflation. This has led to an overall grim outlook on the U.S. economy and many expect continued price increases through the rest of 2022.
Despite the widespread concerns about inflation across generations, the U.S. economy is preforming better than the study’s findings may suggest.
“Americans should know that the economy is actually performing better than people think,” said Hackett. “Job security is extremely strong, and even though we’ve seen a lot of market volatility, consumers have record wealth due to equity market and home price rallies.”