Inflation Still Americans’ Primary Financial Concern

I recently noted in this space that there’s a cadre of economists that simply can’t wrap their heads around why so many regular folks continue to decry inflation. It’s almost as if these experts don’t understand why unnecessary price shocks rub people the wrong way.

Then there’s the group that claims inflation is falling. They’re hoping people aren’t doing their homework because inflation isn’t falling. That would be disinflation. Rather, inflation is merely rising at a less rapid rate than it was in 2022, but that’s not saying much. It’s also saying that today’s “slower” rate is compounding on top of the highest rates seen in 40 years.

So it’s not surprising that many Americans still consider cost of living/inflation to be their biggest financial concern. That also highlights a chasm between the line of thinking held by many economists, particularly those in academia, and “ordinary” Americans. The latter are experiencing the ill effects of inflation in real time while the former just can’t seem to understand why that’s problematic.

Unfortunately for some economists, Americans continue naming rising cost of living as their primary economic concern and that scenario is worsening, not improving.

What the Survey Says

A recent Gallup poll confirms that for the third straight year, Americans said inflation or the high cost of living was the biggest financial headwind facing them and their families. Worse yet are the points that the percentage saying that hit an all-time high and has surged more than 13fold since 2020.

“The 41% naming the issue this year is up slightly from 35% a year ago and 32% in 2022. Before 2022, the highest percentage mentioning inflation was 18% in 2008. Inflation has been named by less than 10% in most other readings since the question was first asked in 2005,” according to the research firm.

Interestingly, the percentage of folks noting that inflation is their biggest financial is more than five times the number of respondents saying they’re concerned about personal debt and almost six times the number telling Gallup they’re worried about healthcare costs.

For advisors , it’s worth noting that, assuming the Gallup survey is accurate, a broad swath of clients likely view inflation as burdensome and punitive. The exceptions are younger clients that have other pressing near-term financial needs and those with left-leaning voting habits – not a criticism, just pointing out what Gallup said.

“46% of older Americans (those aged 50 and older) mention inflation, in contrast with 36% of younger Americans (those under 50),” adds the polling firm. “Inflation is a more top-of-mind concern for middle-income (46%) and upper-income Americans (41% of those with an annual household income of $100,000 or more) than for lower-income Americans (31% of those with a household income of less than $40,000).”

Medical Spending, Retirement Top of Mind, Too

Obviously, advisors aren’t policymakers nor or they Federal Reserve governors, meaning there are limitations when it comes to their ability to minimize inflation. What advisors can do, however, is empower clients with strong inflation-fighting strategies.

Advisors should also note that while considered separate from inflation, medical costs and retirement planning are also big priorities for clients, due in part to elevated inflation.

“Maintaining one’s standard of living ranks as one of the three economic matters Americans worry most about, along with not having enough for retirement and being unable to pay medical bills in the event of a serious illness or accident. The latter two issues have consistently ranked first or second each year in Gallup polling dating back to 2001,” concludes the research firm.

Related: Perhaps Colleges Should Listen to the Kids