It is not unknown that the U.S. economy is going through severe economic downswings – slowdown of business and productivity, rise in unemployment and what not. Its impact is now visible in the survey conducted by Nationwide. U.S. citizens are bracing for potential recession says Nationwide, as a result of the ongoing economic decline.
There has been a steady fall in economic growth, investment, and employment since the pandemic. It has been escalated by the collapse of some of the large U.S. banks. Thus, most Americans are now fearful of their future and are of the opinion that they are heading straight towards a depression – something akin to the Great Recession of 2008.
Nationwide 2023 Economic Impact survey states that around 68% of U.S. citizens anticipate the occurrence of a recession in the next six months, and nearly 80% of those individuals believe it will be a severe one. Additionally, around 62% of respondents hold the view that the upcoming depression will be equally as severe as or worse than the Great Recession experienced between 2007 and 2009.
Currently, only 16% of consumers rate the state of the U.S. economy as good or excellent, indicating an 8-point decrease since September 2022. This sentiment is partially influenced by the escalating interest rates, causing concern for 70% of consumers, a rise from 61% in September 2022.
Moreover, a significant portion of the population, approximately 38%, expresses unease with the Federal Reserve present policies and believes that interest rates should be reduced to alleviate pressure on the U.S. economy. The positive rating of personal finances has decreased by 8 points since September, with only 39% of people giving a favorable assessment.
The percentage of people expressing concerns about inflation and the increasing cost of living has risen by 5 points since September, with 82% currently stating their worries.
Within the past year, 57% of individuals have had to use their savings to cover everyday expenses. This has led to a decrease in household spending, as reported by 54% who eat out less often, 37% who drive less, and 32% who have postponed major purchases like cars or houses. Gen Z and Millennial consumers have even higher percentages, with 64% and 66% respectively.
Over the past year, Americans have made various sacrifices and decisions in response to the increasing inflation, which include:
- Cutting down on eating out (54%) and reducing driving (37%).
- Postponing significant purchases (32%).
- Increasing reliance on credit cards (23%).
- Seeking ways to save money on insurance premiums (23%).
- Actively searching for better-paying job opportunities (20%).
- Decreasing contributions to retirement plans (11%).
- Adjusting coverage or limits on existing insurance policies (10%).
These choices reflect the impact of inflation on consumers, as many have had to delay their financial goals. Presently, the primary financial objectives for consumers include saving for retirement, paying off debts, establishing good credit, and saving for significant expenses.
However, consumers are still uncertain about managing finances. Despite the potential risks and concerns associated with personal finances, a significant number of Americans, particularly younger individuals, may not be seeking assistance from reliable sources.
A recent survey indicates that 70% of consumers are not availing the services of a financial advisor, instead, they talk to their friends or family, or take help of Internet-based tools, social media platforms, and AI tools.
This reluctance is primarily attributed to worries about the associated expenses (46%), inadequate assets (37%), and uncertainty about where to find suitable advisors (22%). Instead, consumers rely on various sources for guidance and support concerning their personal finances.
Thus, U.S. citizens are bracing for potential recession says Nationwide. A significant number of consumers, nearly 60%, have been using their savings to cover daily expenses in recent years, as inflation puts pressure on their finances.
As a result, people are reducing their spending habits by dining out less frequently, driving fewer miles, and postponing major purchases. In the face of a potential economic downturn, the ability to save remains the foremost concern for individuals, with inflation, interest rates, living costs, and unemployment expected to rise in the next year.
Source: Nationwide Survey
