(LOOTPRESS) – Americans’ concerns about the economy have escalated over the past several months, culminating into fears of a future recession, according to Nationwide’s 2023 Economic Impact survey. More than two-thirds of Americans (68%) expect a recession within the next six months and nearly 80% of those who do, expect it to be severe. About two thirds (62%) of respondents believe a recession will be as severe or worse than the 2007-2009 Great Recession.
Only 16% of consumers rated the U.S. economy as good or excellent today, an 8-point decline since September 2022. This sentiment is partly driven by rising interest rates, with 70% of consumers reporting they are concerned about them – up from 61% in September 2022. Many are also uneasy with the Federal Reserve’s current policies, with more than a third (38%) believing it should cut interest rates to ease pressure on the U.S. economy.
“Despite elevated inflation, trouble in the banking sector, and 10 consecutive interest rate hikes, we continue to forecast a moderate recession in the second half of this year, which stands in contrast to fears that we’re heading for another Great Recession,” said Kathy Bostjancic, Nationwide’s Chief Economist. “Consumers are understandably worried, but consumer and business debt burdens are much less than they were 15 years ago and that should limit the degree of the economic downturn.”
Consumers are making tradeoffs to manage inflation
Inflation continues to squeeze consumers’ finances, with 82% reporting they are concerned about inflation and rising living costs today, up five points since September 2022. As a result, more than half (57%) of Americans report dipping into their savings to pay for everyday expenses within the past 12 months. This is even higher for Gen Z and Millennial consumers at 64% and 66%, respectively.
Americans have made other sacrifices or decisions in the past 12 months due to rising inflation, including:
- Eating out less (54%) and driving less (37%)
- Delaying a major purchase (32%)
- Relying more on credit cards (23%)
- Looking for ways to save money on premiums with their existing insurance policies (23%)
- Looking for a better paying job (20%)
- Reducing their retirement plan contributions (11%)
- Decreasing coverage/limits on existing insurance policies (10%)
Because of these choices, the data signals some consumers have had to put their financial goals on hold due to inflation. Consumers’ top financial goals today include saving for retirement (44%), paying off debt (44%), building credit (24%) and saving for large purchases (22%).
Consumers need help navigating and planning for uncertainty
Despite these concerns and risks, most Americans, especially younger ones, may not be turning to the right sources for help. Most consumers surveyed (70%) aren’t using a financial advisor, citing concerns around costs (46%), not having enough assets (37%) and not knowing who to go to (22%). Consumers’ say their sources for advice and support on personal finances include:
- Friends or family (48% Gen Pop*, 66% Gen Z)
- Online resources (26% Gen Pop, 34% Millennials)
- Social media (11% Gen Pop, 22% Gen Z)
- ChatGPT (3% Gen Pop, 8% Gen Z)
- Notably, 34% of Gen Z and 37% of millennials say they trust the financial advice provided by ChatGPT and other AI chatbots
“In moments like this, it’s easy to make emotional investing decisions,” said Kristi Martin Rodriguez, leader of the Nationwide Retirement Institute. “We live in a do-it-yourself world, but the cost of a short-term financial mistake can reverberate for years. A financial professional can work with you to build a plan that will help you weather near-term economic adversity and set you up for success in retirement.”
To view more findings from Nationwide’s 2023 Economic Impact survey, view the report here.
Nationwide partnered with Edelman Data & Intelligence to conduct a 15-minute online survey among a sample of 2,000 nationally representative adult consumers between March 30 and April 13, 2023. As a member in good standing with The Insights Association as well as ESOMAR Edelman Data and Intelligence conducts all research in accordance with local, national and international laws as well as in line with all Market Research Standards and Guidelines.