Inflation Anxiety Prompts Americans to Spend Less

Stressed Over MoneyInflation anxiety is hitting everyone!  Americans continue to reign in their spending habits amid anxiety about rising inflation and an approaching recession.  Specifically, they’re spending less on premium and organic products, delaying purchases, and shifting their spending habits.  They’re also falling behind on paying their bills.

That’s according to an August 2022 survey commissioned by TextNow, a mobile app that aims to offer affordable cell phone service for everyone.  TextNow surveyed 1,000 adults regarding their financial and mental attitudes about paying the bills in today’s uncertain economic environment.  According to the survey:

  • 55% of Americans are nervous about the current economic situation
  • 72% report the economic environment impacts their spending decisions
  • 56% have changed their savings habits
  • 77% have delayed purchasing at least one item
  • 25% have been late or missed a payment on their home utilities (18%), phone bill (17%), or credit card (16%)

The mental health impacts of paying bills are significant as well.  According to the TextNow survey, 49% of respondents said the current economic climate has had a negative impact on their lives.  That means – inflation anxiety!  Specifically, 34% said it affected their mental health, 18% cited a toll on their self esteem, and 17% reported an impact on relationships with friends and family.

Additionally, spending on premium products, organic foods, and expensive gadgets is also falling by the wayside.  Among survey respondents, 45% reported cutting out spending on premium products, and 27% no longer splurge on organic products.  Americans are also putting off big-ticket purchases, including:

  • A new smartphone (39%)
  • A car (32%)
  • Furniture (25%)
  • A plane ticket (21%)
  • A home (18%)

View the survey infographic

Other recent studies have shown that Americans are curbing their spending and savings as inflation and economic unpredictability persist.  And at least one survey has found they aren’t diverting those savings to their retirement accounts.  According to 2022 survey data from Anytime Estimate, a provider of financial calculators and personal finance information, slightly less than two-thirds of Americans are saving for retirement (63%), compared to 93% before the pandemic. And more than one-third (37%) are not currently saving for retirement.  More than half of those surveyed (56%) believe they’ll outlive their retirement savings.

This all adds up to a rather bleak financial health picture for the majority of Americans right now.  Employers have an opportunity to up the ante on financial wellness and education, and remind employees of the benefits of saving as much as they can as early as they can for retirement.  It may also be beneficial to educate them on ways to recession-proof their finances.

Each fall open enrollment consumes time, money and resources.  This year’s open enrollment season is sure to generate some inflation anxiety.  For 2022, American employees anticipate spending additional time reviewing their benefit options.

According to recent Voya research, 70% of Americans surveyed anticipate spending  more time reviewing benefit selections this year.  Part of the change this year is driven from factoring in inflation.  Inflation is impacting prices, finances and life for millions of Americans.


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