Forty-six percent of Americans describe the current United States economic conditions as “poor.” That’s the 29th month in a row where average citizens say things need improvement, even after the U.S. government reported positive news on inflation.
Despite slight economic improvements, Americans are still feeling the pinch. Gallup’s latest poll finds widespread pessimism about both the current state and future trajectory of the U.S. economy.
Coupled with rising food costs, housing woes, and a staggering number of households struggling to make ends meet, the American public’s confidence in the economy remains deeply shaken.
Gallup’s Economic Confidence Index, a key barometer of public sentiment, reveals a deepening malaise among the public, even with the Consumer Price Index falling for the first time in four years.
This was tempered by a slight uptick in unemployment and continued high housing costs.
Housing Crisis Deepens as Food Inflation Adds Pressure
A recent Redfin survey finds half of U.S. homeowners and renters struggle to afford housing payments. The survey, which included 2,995 respondents, reveals one in five individuals face difficulty when they need to pay their rent or mortgage. They may skip meals or work extra hours to make ends meet. Furthermore, about one in six respondents report delaying medical care due to financial constraints.
The survey highlights the harsh realities facing many Americans.
Rising food prices exacerbate this growing housing crisis, outpacing overall inflation. Per the USDA, from 2019 to 2023, the all-food Consumer Price Index (CPI) rose 25%. That’s a higher increase than the all-items CPI, which grew 19.2% over the same period. Food price increases rank just below the 27.1% increase in transportation costs. Yet, they rose faster than housing, medical care, and all other major categories, putting additional pressure on households who already deal with high living costs.
Inflation and Economic Concerns Dominate Public Perception
Inflation continues to be a dominant concern for Americans. In July, 13% of respondents named the high cost of living as the country’s most pressing issue. This is a slight decrease from previous months. However, inflation’s cumulative effects over the past few years are still evident, despite a drop in the Consumer Price Index.
Nearly half of all Americans asked by Gallup rate U.S. economic conditions as poor. This negative assessment dwarfs the 22% who describe conditions as “excellent” or “good,” a figure that decreased 3% from June. Meanwhile, 32% of respondents believe conditions are “only fair.”
The economic outlook remains equally grim. Seventy percent of Americans believe the economy is “getting worse,” compared to just 24% who think it is “getting better.” This marks a slight decline in optimism from June. The ECI’s economic outlook component fell to -46, three points down from last month and the lowest since November 2023’s -49.
Economic Confidence Wanes Amid Broader Concerns
While inflation and economic conditions are major concerns, other issues weigh on Americans’ minds. In July, 13% of Americans cited the economy or inflation as the most important problem facing the U.S., but this trailed behind concerns over poor government (26%) and immigration (19%).
However, when combined, 33% of respondents mentioned economic issues, also including unemployment, wages, and taxes, underscoring many Americans’ ongoing financial strain.
Personal Financial Insecurity on the Rise
A 2024 Study from Northwestern Mutual reveals Americans’ growing financial insecurities. One-third of U.S. adults do not feel financially secure, a jump from 27% last year. That marks the highest level of insecurity recorded in the study’s history. This increase is largely driven by inflation, which continues to weigh heavily on household budgets.
More than half (54%) of U.S. adults expect inflation to increase this year, and only 9% say their household income outpaces it. Inflation concerns far outweigh worries about other financial obstacles such as lack of savings or debt.
Job Market Pessimism Highest Over a Decade
The U.S. job market also shows signs of strain amid these economic challenges. A Federal Reserve Bank of New York report reveals workers are more pessimistic about job security than they were a decade ago. The average expected likelihood of losing a job in the next four months rose to 4.4% in July, the highest level since the Fed started collecting this data in 2014.
That parallels the sharp increase in job seekers — 28.4% of respondents report searching for a job in the last month, the highest level since March 2014. Satisfaction with wages, benefits, and promotion opportunities also decreased.
A Nation Playing Defense
Given the current economic climate, many Americans shift financial strategies to “play defense” rather than “offense.” According to the Northwestern Mutual study, more than half (54%) of U.S. adults expect the United States will enter a recession this year.
42% of U.S. adults feel 2024 is a year to manage risk and protect assets, compared to 29% who see it as a year to capitalize on asset growth opportunities.
56% are primarily focused on cutting costs and 51% on building savings. Younger generations are more likely to add a side hustle. 46% of Gen Z and 43% of millennials favor this strategy. Meanwhile, high-net-worth individuals are moving into safe, high-yielding instruments like money market funds.
On the other hand, 42% focus on investing more in the stock market. This is particularly true for Gen Z (52%) and high-net-worth individuals (50%). Other investment strategies include real estate, high-yield bonds, and alternative assets like hedge funds and private equity.
A Troubling Economic Outlook
As the U.S. economy navigates through these turbulent times, persistent negative sentiments highlight the challenges ahead. Despite some progress in curbing inflation, the road to economic recovery remains uncertain. Struggles with housing costs, food inflation, and job insecurity make the outlook for the remainder of 2024 troubling.
Americans’ pessimism about the economy will likely continue as consumers seek solutions.
