Americans increasingly concerned about inflation as U.S. election nears

50% of people in the U.S. now say the cost of living is the top concern for their country as persistent fears about a recession hang overhead.

The author(s)
  • Melissa Dunne Senior Data Journalist for Ipsos’ Global Advisor team
Get in touch

The sky is falling … or is it? 

Pretty much ever since the U.S. Federal Reserve started hiking interest rates in March 2022 in a bid to bring down inflation there’s been talk of a hard crash. That hasn’t happened, but there are still concerns it will.

The consistent chatter of a possible recession in the U.S. has led to what’s been called a ‘vibecession’— the general feeling in the air that the economy is much worse than it actually is. And it’s not only regular people on Main Street feeling nervous lately, jittery stockbrokers recently led to Wall Street’s worst day since 2022, following a weaker than expected jobs report only to send the market up to its best day in more than two years mere days later. 

On the consumer side, there looks to be “sort of this hangover happening,” says Chris Jackson, Senior Vice President of Public Affairs for Ipsos in the U.S., in the wake of what was dubbed “revenge spending” when Americans tried to make up for lost time by splurging on everything from meals out to trips abroad once pandemic restrictions lifted. Since then the idea the U.S. is in a grave downturn has gained traction, in part, due to “the tenor and tone of America's politics and news coverage, in general, having this sort of catastrophist ‘everything is terrible, everything is bad’ tonality to it,” says Jackson. 

Our monthly What Worries the World polling finds the majority of Americans think things in their country are on the wrong track these days (63% in July 2024, up from 58% who said the same five years ago in July 2019) and that the current economic situation in their country is bad (56% in July 2024 versus 43% who said the same in July 2019). 

The R word

The American economy has weathered the many storms of the 2020s (COVID-19 pandemic, sticky inflation, interest rate hikes) without falling into a long recession, at least so far.

The last official recession in the U.S. was short, running from February-April 2020 according to the National Bureau of Economic Research, as a direct result of pandemic shutdowns. It’s actually been more than 15 years since America has had a severe, prolonged downturn – known as the Great Recession, lasting from December 2007 until June 2009, when scores of people lost their jobs and homes. 

Things are certainly not nearly as dire now as they were during 2007-2009 and yet some Americans think the U.S. is in dire straits. In April 2024, just over one in three (34%) Americans feel the economy is in a recession. However, this is lower than 12 months ago when 43% of Americans thought this was the case. 

At the same time, Americans are nowhere near as bullish on the economy as they were right before the pandemic with 44% describing the economic situation in the U.S. as good in July 2024, in comparison to the 68% who said the same in January 2020 right before the pandemic. 

That’s despite gross domestic product (GDP) rising and unemployment, while up a bit to 4.3% in July, being well down from a record spike to 14.7% in April 2020 during the early, scary days of the coronavirus crisis.

A shock to the system 

Harsh lockdowns in March 2020, when Donald Trump was president, plunged consumer confidence to historic lows around the globe, then came the invasion of Ukraine in February 2022, which sent some prices further through the roof. 

While those shocks to the global economy are now mostly in the rearview mirror, people are still feeling shaky. “I don’t think that we can discount the pandemic and its aftermath and people's feelings about the broader economy,” says Jackson. 

Those feelings look to be turning into action with some companies noting in recent investor calls that consumers are pulling back on spending after shelling out more for everything from toilet paper during the pandemic to concert tickets post-lockdowns. 

And the stickiness of inflation continues to stick in the minds of the American people. While concern has fallen to 33%, on average across 29 countries, 50% of Americans now say inflation is a top concern for their country, up five percentage points year-over-year. The rise in worry comes as actual inflation falls, with the consumer price index (CPI) in the U.S. being well down from 9.1% in June 2022 to 2.9% in July 2024. Though, it’s key to note the CPI is set to be up cumulatively by just over 20% since 2020 by the end of this year and daily staples like the food-at-home category is on pace to have soared almost 28% over the past five years 

“I think the key thing that has been suppressing consumer sentiment has been inflation,” says Jackson. “The cost of living has been a real drag for people. … Inflation has been the thing that’s front and center and what really dominates Americans’ minds, in particular, is those costs that they see regularly, like when they go and fill up their car at the gas station every week.” 

The divided states of America 

The reality is a lot of consumers in the U.S., like elsewhere, likely don’t know how their country’s inflation rate compares to other places where it’s much higher or what the national GDP is this month vs. last month.

 But people do know how they feel and Republicans, in particular, are pretty pessimistic these days. Almost eight in 10 (78%) Republicans think the current economic situation in the U.S. is bad, while only 33% of Democrats agree. Republicans are also significantly more likely to be dissatisfied with how things are going in their country today (76%) compared to Democrats (39%). And Ipsos U.S. polling this spring found almost half (48%) of Republicans said they worry the most about a total economic collapse in the U.S., compared to 22% of Democrats who said the same. 

The pessimism also cuts down educational lines, with similar proportions of those with lower (63%) to medium (62%) levels of education saying the economy is bad, vs. 41% of those with higher levels of education.

One of the bigger cleavages in America right now is education level, says Jackson, adding “oftentimes it correlates really strongly with the type of work people do.” And some Americans in jobs that don’t require much formal schooling, ranging from car manufacturing to real estate sales, are likely really feeling the pain from being in sectors that are highly sensitive to higher interest rates, he notes.

Traditionally, the Democratic Party has appealed to workers with lower levels of education but in recent election cycles that has become scrambled and some have become more “Republican leaning,” says Jackson. If the Democratic Party is going to hold on to power, he adds, it will “need the votes of a lot of working-class Americans who’ve been feeling a lot economic pressure.” 

Same country, different experiences 

It can seem as if the divide between the haves and have nots in America is starker than ever. 

And, indeed, the cost-of-living crisis hasn’t hit everyone equally, with the majority of higher-income people riding out the money pressures of this decade pretty well as lower- and medium-income people have struggled. 

Only 27% of Americans in lower-income households said they were living comfortably/doing alright in April 2024, down slightly from 29% who said the same in April 2022. Just over half (54%) of medium-income Americans said they’re living comfortably in April 2024, unchanged from April 2022. Meanwhile, higher-income households in the U.S. haven’t been feeling nearly as stretched with 71% saying they’re living comfortably in April 2024 vs. 69% who said the same two years prior. 

While inflation is down the cost of everything, from hot dogs to houses, soared during and after the pandemic while one’s wages didn’t necessarily keep up. Plus, the Fed has kept key interest rates at 5.25% to 5.5% for now, meaning the ultimate cost (including borrowing money for big-ticket purchases) remains quite high for many consumers. 

Despite this, 45% of Americans feel more comfortable making a major purchase like a home or a car in July 2024, though that’s lower than the 56% who said the same in January 2020 right before unexpected lockdowns sent the economy into a short, sharp recession. 

And like many other issues, there’s a divide based on income, with over half (55%) of high-income people currently feeling more comfortable making a major purchase, compared to 41% of medium-income households and 33% of those in lower-income households. 

Still sweating red-hot price rises 

The U.S., along with several other countries, has seemingly been heading for a soft landing, though there’s once again rising murmurings of a hard crash. 

Searing inflation rose and is now cooling under the leadership of U.S. President Joe Biden, yet just over half (55%) of Americans said they were just about getting by or finding it quite/very difficult to manage financially in April 2024, up 14 points from April 2022. Whether the current Vice President/Democratic presidential candidate Kamala Harris will be punished for the perceived economic strain people have been under remains to be seen, though as Jackson notes “she fundamentally still has the same economic record Biden does” as his second-in-command since January 2021. 

Our latest election polling finds high prices remains top of mind with half of Americans saying inflation/increasing costs is the most important issue facing the U.S. Interestingly, those who consume conservative media are more worried about the cost-of-living crisis than those who follow other news sources, with 67% of conservative media consumers saying inflation/increasing costs is a top issue compared to 40% of mainstream media consumers. Whether these lingering bad vibes about inflation totally line up with reality or not, the reality is economic issues will loom large as the U.S. presidential race grinds on. 

Currently, Harris (42%) has a slight lead over Republican nominee Trump (37%) among registered voters. But as the past few weeks (an assassination attempt on a former president, an incumbent president choosing not to run for re-election) has shown us anything can happen, though no matter what the economy will “absolutely” remain a key issue, says Jackson. 

Will Harris or Trump be able to spin the economic woes and worries of this post-pandemic era into a win on November 5? Stay tuned to find out.

The author(s)
  • Melissa Dunne Senior Data Journalist for Ipsos’ Global Advisor team

Society