The Recession Has Consumers on the Edge. Here’s What They’re Most Concerned About | So Good News

Due to inflation and rising interest rates, 76% of Americans consider the US economy to be ‘poor’ or ‘fair’ according to the latest Agency Forward survey from Nationwide. Ahead of the Fed’s latest interest rate hike, 68% of consumers expect rates to rise in the coming months. And considering their financial situation, nearly 3 in 4 (77%) consumers are ‘moderately’ or ‘extremely’ concerned about inflation and the rising cost of living.

Global President, P&C Personal Lines Beth Riczko sat down with me to discuss the findings, what this economic crisis means for consumer finances, and consumer habits that may be slowing down.

Gary Drenik: Where are consumers financially?

Beth Riczko: Almost every day there is a new headline about the state of the economy and how it is affecting consumers, and Americans are worried. Many consumers have a pessimistic view of the state of the economy and are not counting on signs of relief anytime soon.

According to a recent survey by Prosper Insights & Analytics, 32% of consumers feel confident, while 68% feel less confident. Combine this with our Nationwide data which shows that consumers expect interest rates to continue to rise as their finances and mental health improve. While more than half (53%) said their finances are ‘poor’ or ‘good,’ that leaves 51% saying their mental health has been affected by ongoing stress.

Drenik: What are they doing to prepare if we go into trouble as many say?

Riczko: Most of them Americans do not feel ready to deal with the economic crisis. That doesn’t mean they aren’t testing their defenses. Data shows consumers are changing their spending habits due to economic uncertainty. Our research told us that, based on economic conditions, more than a third of consumers (38%) ate out regularly; 36% changed their budget; 33% reduced the amount they drove; and 32% started buying cheaper or different products than they used to in the previous 6 months to meet their financial needs. We also saw nearly 1 in 4 Gen-Z consumers (23%) say they expect to take on another job compared to just 14% of the general population.

Drenik: This may be the first time Gen-Z faces financial hardship as working adults manage their finances. How do their concerns differ from other groups that have experienced a crisis like The Great Recession of 2008?

Riczko: Data shows that Gen-Z consumers are more concerned about their money than the general population. Globally they found 60% of Gen-Z say their finances are ‘good’ or ‘poor’ compared to 53% of the general population – and more than 4 in 10 (44%) say their finances have gotten worse. last 6 months.

For those who are starting work for the first time, preparing to pay off student loans, or finding affordable housing, times of financial crisis can be especially scary. According to a recent study by Prosper Insights & Analytics, Gen-Z is 7% less likely to default on a loan in the next three months compared to other age groups. These are alarming numbers considering that student loan debt has skyrocketed. Research by the National Agency Forward shows that 71% of Gen-Z agree that their finances have been damaged by inflation and the rising cost of living compared to 66% of the general population.

Drenik: You mentioned that some consumers are thinking of taking up another job to make ends meet. In addition to seeking more money, are there concerns about settling with their main employer?

Riczko: Workers are worried about the economic slowdown and the prospect of job losses—especially layoffs or reduced wages or hours. Our research shows that when considering how a recession or recession in the US could affect them, 4 in 10 (40%) consumers are worried about layoffs, layoffs, or cut wages. Global data also suggests that they may not be wrong, as 21% of respondents say they are seeing a decrease in work and 33% of Gen-Z have decreased working hours. In addition to hiring freezes and reduced hours, 31% of Gen-Z report being asked to work other jobs without compensation in the past 6 months.

Drenik: When thinking about reducing the household budget, where should consumers think twice before spending?

Riczko: Consumers are already making decisions about eating out less or buying different foods at the store. But one area that needs to be taken care of when returning money is insurance. Nationwide’s Agency Forward survey found that nearly half of consumers expect insurance premiums to increase (48%), and that’s probably why more than half have already looked at or will look into ways to save on premiums (56%). Reducing transmission may seem like a short-term fix, but it can be very expensive in the long run. They may be reducing the costs associated with future problems and if they are willing to take additional costs if they reduce the cost of the insurance.

Due to difficult purchasing conditions, inflation and inflation, consumers spend more on disaster relief. So, while cutting the spread may seem like a reasonable idea in the short term, it can be very costly for consumers in the long run. For example, if you increase your premiums to reduce insurance premiums and losses, your out-of-pocket costs will be higher. This is not a good time to take risks. Users should consult with their service provider.

Drenik: Thank you, Beth, for sharing your thoughts on the financial crisis facing consumers and the impact it has on the economy. It’s interesting to understand how different generations are affected. We appreciate your time here today as you help us prepare for the recession.