All things inflation
Inflation is the dominant issue of the day, but is affecting Americans of varying income levels differently.
Inflation keeps ticking upwards, hitting 8.5.% in March, the highest it’s been in 40 years. Wages might be rising, but the gains are largely canceled out by inflationary pressures.
At the same time, people aren’t experiencing inflation the same way. Less affluent Americans are more likely to put their money towards the basics, with little buffer after inflation.
Below, we look at how inflation is affecting Americans’ spending habits, and implications for the current administration.
- Inflationary panorama. With inflation as the backdrop, consumer confidence overall is still holding below pre-pandemic levels. This is the big picture.
- Coping behavior. Close to two in five Americans say they plan to pull back on spending because of inflation. But “pulling back” can mean different things in different contexts. For more affluent Americans, this might mean looking to score deals on sales or promotions. But for the least affluent, it might look more like going without in order to make ends meet. Again, the tale of two Americas—one rich; the other poor.
- Counting pennies for the gas pump. Gas prices are perhaps the most glaringly obvious sign of the times. Just under half of all Americans say they’re making their lives more difficult, although again, it’s been tougher for those with less to spare. What’s the alternative? More public transportation? Electric cars? Or just tough times for the foreseeable future? We will see.
- Economic agenda. It should come as no surprise that the economy remains the public’s top priority, while concern about other issues, like COVID or the conflict in Ukraine, drift into the shadows. Today, it is the economy, economy, economy.
- Biden’s challenge. This all spells bad news for Biden, as the public’s perception of his handling of the post-COVID economic recovery is still underwater. But he holds the lowest marks on his handling of inflation and gas prices. Look out Dems, November will be a bad month.
The inflationary agenda is here to stay in 2022. We can expect gas and groceries to stay expensive, while other staples of life, like rent, are also expected to keep ticking upwards. So this is how our world turns—from COVID to inflation. Makes sense.
