A significant portion of the American population is experiencing financial stress, as indicated by a recent CNN poll which found that 40% of US adults are frequently concerned about their family’s income not being sufficient to cover rising costs.
In response to these financial pressures, many Americans are resorting to various strategies such as taking on additional employment, minimizing car usage, and increasing their reliance on credit cards. The situation is particularly acute for Latino (52%) and Black (46%) Americans, who are more likely to express concerns about affording their expenses.
Moreover, over half (55%) of those with an annual income below $50,000 are anxious about having enough money for their daily necessities.
Americans struggling to make ends meet
These statistics underscore the gap between the national economic indicators of low unemployment and decreasing inflation, and the lived experiences of many Americans who continue to struggle with the effects of rising costs.
Angela Russell, a resident of Ohio and a program analyst at the Centers for Disease Control and Prevention (CDC), is a case in point. With a family that includes two adult children and three grandchildren, she has relocated to a less expensive rural area due to the high cost of living. She notes that not only has the grocery bill skyrocketed, but all expenses, including clothing and insurance, have increased significantly.
For two-thirds of Americans (65%), the primary economic concern for their families is the cost of living and expenses. Although this is a slight decrease from the 75% reported in the summer of 2022, it is still much higher than the 43% who cited it in the summer of 2021. According to Moody’s Analytics, the average household is now spending $925 more per month on the same goods and services compared to three years ago.
Rising costs
Despite a recent easing of inflation, with consumer prices rising by just 3% year-over-year in July, down from the peak of 9% in June 2022, many Americans are not experiencing a sense of relief. Prices are still higher than they were a year ago, and consumers are dealing with the accumulated effects of past price hikes.
Greg McBride, chief financial analyst at Bankrate, points out that while inflation may be moderating, the cumulative impact of several years of inflation has significantly affected household budgets. He notes that while the economic overview suggests low unemployment, economic growth, and increased consumer spending, the reality for many is that moderating inflation does not equate to lower prices, just a slower rate of increase.
In response to these economic conditions, many Americans are seeking ways to supplement their income. The CNN poll revealed that 35% of adults have taken on additional work to manage their finances, with Latinos (52%), Black Americans (44%), and those under 45 (47%) showing higher rates of engaging in extra work.
Most Americans have had to adjust their spending habits, with 69% cutting back on non-essential spending and entertainment, 68% altering their grocery shopping, 41% reducing driving, and 37% using credit cards for necessities. While the number of Americans cutting back on driving has decreased since spring 2022, the percentages of those changing their discretionary spending and grocery shopping have remained fairly consistent over the past two years.
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