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Portfolio > Economy & Markets > Economic Trends

Gen X Most Anxious About Economy: SSGA

By Michael S. Fischer

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What You Need to Know

  • Rising inflation is causing anxiety and belt-tightening among investors of all generations.
  • Gen Xers are significantly more worried than their younger and older counterparts about being able to afford to retire when planned.
  • Consumers say they're reducing discretionary spending, delaying major purchases and cutting back on essentials such as gas and groceries.

Two-thirds of American investors say they are concerned about the outlook for the U.S. economy over the next 12 months, according to survey results released Tuesday by State Street Global Advisors. Generation X respondents reported more pessimism than their younger and older counterparts.

Fifty-seven percent of respondents in its Inflation Impact Survey cited worries about market volatility, and 59% about the value of their current investments.

Rising inflation has caused 51% of investors surveyed to curtail discretionary spending such as dining out and entertainment over the past 12 months. Thirty-five percent have spent less on vacations or delayed a major purchase, and 29% have cut back on essential expenses such as groceries and gasoline.

Amid the belt-tightening, it is not surprising that 58% of respondents think the U.S. economy is headed for a recession in the next six to 12 months, and 47% say inflation is causing them stress or anxiety.

Furthermore, few believe the worst is over. Only 17% of investors said inflation has already peaked, in contrast to 49% who said it has not.

“As Americans work to defend themselves against the corrosive effect of inflation on their finances, we’re encouraged to see the majority are making tradeoffs in discretionary spending, rather than sacrificing contributions to their long-term savings goals,” Brie Williams, head of practice management at State Street Global Advisors, said in a statement.

“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.”

SSGA, in partnership with A2Bplanning and its field partner, Prodege, conducted an online survey from June 28 to July 5 among 243 adults with investable assets of $250,000 or more.

Gen Xers in Distress

The survey found that 43% of millennials believe inflation has peaked, compared with a mere 5% of Gen Xers and baby boomers.

Record-high inflation isn’t dampening millennials’ optimism that they will reach their financial goals, with 63% confident they can do so. In contrast, rising inflation leaves only 32% of Gen Xers and 40% of boomers confident they will reach their financial goals.

SSGA noted that in June 2021, concern about rising inflation was similar across generations, whereas one year later, 88% of Gen Xers indicated concern, compared with 72% of millennials and 70% of boomers.

A similar trend holds when it comes to the overall economic outlook for the U.S. in the next 12 months: 76% of Gen Xers are concerned, versus 60% of millennials and 65% of boomers. Likewise, 56% of Gen Xers are worried about maintaining their current standard of living, compared with 46% of millennials and 43% of boomers.

The so-called sandwich generation is also significantly more worried than their younger and older counterparts about being able to afford to retire when planned and being able to afford expenses in retirement.

Examination of the money moves each generation has made in the last 12 months shows that many more Gen Xers than millennials and boomers have cut back on spending.

Sixty-one percent of Gen Xers reported that they have reduced discretionary spending on dining out, entertainment and the like. Forty-one percent have cut back on groceries, gasoline or other essential purchases. And 39% have delayed a major purchase such as a vehicle or home appliance.

“These are challenging times for many Americans,” Williams said. “About half of all investors believe that the lessons learned by navigating the current inflationary environment will have a lasting impact on their spending and saving habits moving forward.”

She added that those who make prudent financial decisions now may find it easier to commit to a budget or investment discipline when the economy improves. “For those looking for help managing through the uncertainty, now is the time to talk to a financial advisor to make sure they’re on track to meet their financial goals.”

(Image: deagreez/Adobe Stock)

Michael S. Fischer

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