Tue, 09 August 2022 | economy inflation
State Street Global Advisors, State Street Corporation's (NYSE: STT) asset management business, released its Inflation Impact Survey today. The survey reveals how inflation affects Americans' spending, saving, and investing behavior. Over two-thirds of investors (67%) are concerned about our country's economic outlook over the next 12 months, with over half also concerned about market volatility (57%) and the value of their current investments (59%). Generation X is more concerned than Millennials or Boomers about inflation, the stock market, and the economy.
Less than a quarter of Americans were willing to cut retirement or education savings, demonstrating their long-term financial commitment.
Brie Williams, head of Practice Management at State Street Global Advisors, said the majority of Americans are sacrificing discretionary spending rather than long-term savings. “Notably, less than one-quarter of Americans were willing to curtail contributions to their retirement savings or their child’s education savings, which demonstrates a firm commitment to their long-term financial goals.”
Have prices peaked?
58% of investors agree that the US economy will enter a recession in the next six to 12 months, and 47% agree that inflation is causing them stress/anxiety.
The worst isn't over, either. 17% of investors think inflation has peaked. 49% don't believe inflation has peaked.
Millennials and inflation: half-full?
43% of Millennials believe inflation has peaked, compared to 5% of Gen X and Boomers.
63% of Millennials are confident they can reach their financial goals despite record high inflation, while most investors believe inflation is an obstacle. Due to rising inflation, 32% of Gen Xers and 40% of Boomers are confident in reaching their financial goals.
Distressed Sandwich Generation
In June 2021, Gen Xers (88%) were more concerned about inflation than Millennials (72%) and Boomers (70%).
76% of Gen X-ers are concerned about the next year's economic outlook, compared to 60% of Millennials and 65% of Boomers.
Personal finances weren't looking good. 56% of Gen X-ers worry about maintaining their standard of living, versus 46% of Millennials and 43% of Boomers.
Gen X is also concerned about being able to retire when they want, compared to Millennials and Boomers. Gen X was more concerned about retirement expenses (56% vs. 41% of Millennials and 44% of Boomers).
Gen X fights inflation
Generation X has cut spending more than Millennials and Boomers in the last year.
Gen Xers have cut back on discretionary spending like dining out or entertainment (61%) and essential purchases like groceries or gasoline (41%), or delayed a major purchase like a vehicle or home appliance (39%).
"Many Americans are struggling. About half of investors believe navigating the current inflationary environment will affect their spending and saving habits, Williams said. Prudent financial decisions during uncertain times may make budgeting or investing easier when the economy improves. Now is the time to consult a financial advisor if you need help managing the uncertainty.
Source: State Street