53% of Consumers Say They Are Financially Worse Off

Inflation runs rampant, at levels not seen in decades. Earnings reports continue to roll in, complete with cautious management commentary: Although consumers are still spending, taking reserves against anticipated loan losses seems the prudent thing to do.

And through it all, the Fed continues to raise rates, which means that the carrying costs of debt are more expensive.

In the Consumer Inflation Sentiment report, we find that the sentiment is, well, bleak. We surveyed more than 3,780 consumers to gauge their thoughts and feelings about their current and future financial positions.

Get the Report: Consumer Inflation Sentiment: July 2022 — Consumers Pull Back and Prepare for the Long Haul

At a high level, inflation and rising rates have been taking their toll. About 53% of respondents say their financial positions have worsened in the past year. More than 35% say their financial situations will worsen in the coming year. Of that tally, nearly half of those who say they live paycheck to paycheck with difficulties paying bills say their financial standings have worsened in the past year. That finding, we contend, points to a tough time meeting basic obligations in the months ahead.

No surprise, then, that 70% of consumers have been pulling back on their spending. And it’s also no surprise that, as evidenced in the chart below, more than half of consumers state that their household budgets “cannot take” further price increases. And nearly half of individuals/households have dipped into savings to cover household expenses.

The consumer has been the engine of growth for the US economy for decades — but the road ahead looks a lot bumpier than it has in a long, long time.



About: The findings in PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed the responses from 9,904 consumers in Australia, Germany, the UK and the US. and showed strong demand for a single multifunctional super apps rather than using dozens of individual ones.

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