Two-thirds of U.S. consumers do not expect their personal finances to improve in 2022, with slightly more than half of this group citing inflation as the barrier to a better money situation, according to Bankrate’s December Financial Security Index. Inflation surged 6.8% in November 2021, putting it at a 39-year high as prices climbed for food, housing and energy.
“Inflation worries have dragged consumer confidence to a decade low and is the top reason Americans don’t expect their finances to improve, and particularly to get worse,” said Greg McBride, Bankrate’s chief financial analyst. “This feeling goes far beyond gas prices, as inflation has broadened out and consumers see higher prices at every turn.”
Other top reasons given by those who don’t expect financial improvement in 2022 include the ongoing COVID-19 pandemic, stagnant or declining wages, personal debt and changing interest rates. Of the one-third of the personal finance survey respondents who expect their money situation to improve in the coming year, 46% attribute their optimism to making more money at work and 36% chalk it up to having less debt.
Key findings:
– COVID-19 is still seen as a financial obstacle in 2022.
– Others blame political partisanship for financial woes.
– Financial optimism varies by age and location.
– U.S. consumers are determined to reduce debt.
The ongoing COVID-19 pandemic is one of the chief reasons people expect their personal finances not to improve in 2022, according to the survey, which was conducted after the omicron variant emerged. With the country about to enter Year Three of the pandemic, rising prices and supply chain issues are causes for concern, and some people continue to put off financial milestones as a result.
The omicron variant may spread more easily than other variants, and the effectiveness of vaccines against such new variants is yet to be determined, the CDC reported. It also remains to be seen how strongly omicron will affect the economy, experts say.
Political partisanship is a reason many U.S. consumers anticipate their finances won’t improve in 2022, the survey found. Those who expected their money situation to worsen or stay the same laid the blame on political leaders in Washington at a rate of 57% and 25%, respectively.
In recent days, the Senate voted to advance a bill that would allow the lifting of the debt ceiling, a measure that could keep the country from defaulting on its debt. If both political parties fail to agree on the terms of a bill that would increase how much money the government is allowed to borrow, the U.S. economy could be in jeopardy, analysts say.