Inflation is causing challenges for many Americans

Household expenses are on the rise for most Americans, but few have seen a corresponding increase in their income.

December 9, 2021

Views of the national economy have soured over the year while Americans’ evaluation of their own personal finances have not changed. Still, many Americans report financial challenges.  Most are facing growing household expenses while fewer say their income has increased.  Recent increases in the prices of goods and services are having an impact on most Americans with many changing spending and saving practices. 

Thirty-five percent of Americans describe national economic conditions as good, down from 47% in June.  The public’s view of the overall economy continues to be influenced by their political identification.  In June, 63% of Democrats said the economy was good, while 68% of Republicans described it as poor.  Now, 55% of Democrats think the national economy is in good condition, while 85% of Republicans say it is in poor shape.  

The public’s assessment of their own financial situation is less influenced by partisanship.  Overall, 64% of Americans say their personal financial situation is good, including 71% of Democrats and 61% of Republicans. However, nearly half of those with a household income under $50,000 describe their financial circumstances in negative terms.

Even though most say their financial circumstances are good, 67% report higher household expenses compared with March 1, 2020 and only 24% have experienced a corresponding rise in household income. 

Most Americans report higher prices than usual for many items.  Eighty-five percent have seen higher than usual prices for both groceries and gas in recent months, and 57% have had to pay more for electricity. Fifty-one percent have not purchased an appliance in recent months. But among those who have, 75% report paying a premium for it.

Rising prices are having a significant impact on people’s household finances. More than half of those who are paying more for electricity, holiday gifts, and appliances report major impacts from the price increase. The impact is especially acute among lower income households.

Higher prices are having an effect people’s behavior.  Among those for whom increased costs are having major repercussions, many are less inclined to eat out or to shop for non-essentials, and are more likely to look for discount prices. They tend to drive less and delay major purchases. And many are making more withdrawals from savings.

Americans’ assessment of President Biden’s handling of the economy remains below 50%.  At 48% approval, the president’s overall rating has not changed much since the summer. Only his handling of the coronavirus is above 50%, however in the spring and early summer, more than two-thirds approved of how he was dealing with the pandemic. 

The nationwide poll was conducted December 2-7, 2021 using the AmeriSpeak® Panel, the probability-based panel of NORC at the University of Chicago. Online and telephone interviews using landlines and cell phones were conducted with 1,089 adults. The margin of sampling error is +/- 4.1 percentage points.

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