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Americans Feel Financially Unprepared to Weather a Recession

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What You Need to Know

  • Consumers fear a recession is imminent, leaving them feeling unprepared when it comes to their personal finances, according to a recent Nationwide survey.
  • More than half of survey respondents reported that inflation/rising living costs have negatively affected their mental health.
  • In response to concerns about losing their job, consumers are cutting expenses, including insurance coverage.

U.S. consumers are feeling vulnerable as they perceive that the worsening economy is negatively affecting their personal finances, mental health and job security, according to survey results released Tuesday by Nationwide.

Consumers fear a recession is imminent, leaving them feeling unprepared when it comes to their personal finances.

Three-quarters of survey participants rated the current U.S. economy as poor or fair, and 53% said the same about their own situation.

The survey, which was fielded just ahead of the latest Federal Reserve interest rate increase, also showed that 68% of consumers expect rates to rise in the coming months. And 64% of respondents, including 69% from Generation Z, anticipate that inflation will increase.

Two-thirds of consumers said they expect the U.S. economy to be in recession in the next six months, and 55% expect the U.S. stock market to decline further. Against this backdrop, only 37% said they feel prepared to weather a recession.

Edelman Data & Intelligence conducted a 15-minute quantitative online survey between Sept. 6 and Sept. 22 among a sample of 2,000 nationally representative consumers, including 200 Gen Zers, 401 small-business owners, 408 middle-market business owners and 401 agents.

Inflation, Cost of Living Weigh on Consumers’ Minds

The survey also revealed specific economic pressures that are worrying consumers. Seventy-seven percent said they are concerned about inflation and rising living costs, and 71% said the same about a possible recession and economic downturn in the U.S.

Sixty-six percent of respondents believe that their personal financial situation has been hurt by inflation/rising living costs, and 49% by the uncertain economic environment over the past six months.

More alarming, 54% of survey participants reported that inflation/rising living costs have negatively affected their mental health, rising to 64% among Gen Zers.

“Consumers are understandably feeling financially vulnerable due to escalating economic pressures,” Nationwide senior economist Ben Ayers said in a statement. “And they lack a clear understanding of how they can best prepare and brace for continued financial instability.”

Job Insecurity Prompts Cutbacks

Four in 10 consumers surveyed said they are concerned about losing their job, being furloughed or taking a pay cut. In addition, 26% of employees reported that they are being asked to assume more responsibilities without additional compensation as the economy has tightened over the past six months.

With their job futures uncertain, many consumers are considering where they can begin to cut expenses to prepare for the worst, according to the survey.

Take insurance policies. Fifty-six percent of the overall survey sample and 65% of Gen Z said they have already looked or will look for ways to save on premiums with their existing policies — unaware, Nationwide noted, that cutting back now may result in greater financial loss in the future.

“Cutting insurance coverage to save money is a short-term fix that can lead to long-term financial issues if something were to happen,” Elizabeth Riczko, president of P&C Personal Lines, said in the statement. “Consumers looking for ways to save money should speak with their insurance agent to ensure their policy can best suit their current needs to protect them from any unexpected problems.”

Other ways consumers are mitigating financial losses include:

  • Dining out less: 38%
  • Adjusting their budget: 36%
  • Beginning to buy cheaper/different items than they typically would: 32%


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