Out On The Street

Inflation's Impact: It’s Going To Be Difficult And Oppressive...

88% cut spending, while many worry about providing food & paying the mortgage

A new report from Breeze, a disability insurance market, measures the impact of inflation where it hurst the most – consumers. Excerpts are presented below. Access the full report here.

This past Friday, the Bureau of Labor Statistics released the latest inflation data. Not great.

The consumer price index rose 8.6% in May from a year ago, the highest increase since December 1981 – 41 years ago. Over the last year, food is up 10.1%, fuel is up 106.7%, and shelter costs are up 5.5%.

On the state of the economy, Jamie Dimon recently said this: “That hurricane is right out there down the road coming our way. We just don’t know if it’s a minor one or Superstorm Sandy. You better brace yourself.”

Former Goldman Sachs CEO Lloyd Blankfein had an equally bleak outlook: “Overall for individuals, and certainly for individuals at the bottom quartile, it’s going to be quite difficult and oppressive.”

To gauge the human-level impact of this poor economic climate, Breeze surveyed 2,003 adult consumers. Nearly 90% have cut spending, and many question how much longer they’ll be able to provide food for their families or pay the mortgage.

Eighty Eight Percent Cut Spending

Two Thousand and three adult Americans were asked the following: “As a result of inflation and rising prices, have you had to cut back on your spending?” 88% answered “yes,” while 12% have not reduced spending.

Testimonial:

I’ve had to not only cut back on groceries, but remove my grocery and restaurant budget entirely some months to be able to afford gas. I’ve also reduced pet food expenses and removed plans to go on vacation in the Fall.

I’m now evaluating using that time off to do contract work to earn extra cash. I also use my credit card more than ever before, when I used to just use it for emergencies.
Andrea Ritter, digital marketing & communications manager

75% Worried About Providing Food For Their Families

The ramifications of inflation have been far-reaching and personal for the sweeping majority of consumers.

  • Amongst those that have cut back on groceries or restaurants, 75% said they are worried about providing food for themselves or their families as a result of inflation and rising prices. 42% from this group have never previously worried about this.
  • Amongst those that have cut back on gas, 93% said they are intentionally driving less, which 58% said has had a negative impact on their work or social relationships.
  • Amongst those that have cut back on credit card or debt payments, 86% are worried this will result in an escapable amount of debt.
  • Amongst those that have cut back on travel or vacation costs, 87% have had to cancel vacation plans to save money.

Testimonial:

I think my number one pain point has been at the pump. With gas prices being so high, I’ve really had to start putting a lot of thought into what trips I really need to take and which ones can wait. I have also felt the pinch shopping for groceries; it’s one thing when a few items are more expensive, but when it seems like suddenly every item costs a dollar or two more, it adds up quickly.

In fact, between gas and groceries, I’m in a bit of a catch-22 when it’s time to shop for groceries: Do I drive a bit further to the discount grocery store, or will that cost me too much in gas?
Marcus Hutsen, business development manager

Full Survey Results

Notes: Some answers won’t add up to exactly 100% due to rounding.

1. As a result of inflation and rising prices, have you had to cut back on your spending?

88% answered “yes”

12% answered “no”

2. (If “yes” to Q1) Where have you had to cut back on your spending? (Select all that apply)

57% answered “groceries”

73% answered “dine-in restaurants/takeout”

62% answered “social spending (i.e. bars, concerts, sporting events, golf, etc.)”

63% answered “consumer spending (i.e. electronics, home & garden, clothes, luxury items, etc.”

44% answered “gas”

35% answered “credit card/other debt payments”

54% answered “travel/vacation”

23% answered “pet spending”

1% answered “none of the above”

3. (Asked to those who answered “groceries” or “dine-in restaurants/takeout” to Q2) As a result of inflation and rising prices, do you worry you will be able to provide food for yourself/your family?

75% answered “yes”

25% answered “no”

4. (If “yes” to Q3) Have you ever previously worried about being able to provide food for yourself/your family before this?

58% answered “yes”

42% answered “no”

5. (Asked to those who answered “gas” to Q2) As a result of inflation and rising prices, have you been driving less intentionally to save money on gas?

93% answered “yes”

7% answered “no”

6. (If “yes” to Q5) Has intentionally driving less had a negative impact on your work and/or social relationships?

58% answered “yes”

42% answered “no”

7. (Asked to those who answered “credit card/other debt payments” to Q2) As a result of inflation and rising prices, do you worry that cutting back on your credit card and/or other debt payments will result in an inescapable amount of debt?

86% answered “yes”

14% answered “no”

8. (Asked to those who answered “travel/vacation” to Q2) As a result of inflation and rising prices, have you had to cancel travel/vacation plans to save money?

87% answered “yes”

13% answered “no”

9. Has inflation and rising prices had a negative impact on your mental health?

67% answered “yes”

33% answered “no”

10. Has inflation and rising prices made you more stressed than usual?

81% answered “yes”

19% answered “no”

11. Do you currently make rent or mortgage payments?

74% answered “yes”

26% answered “no”

12. (If “yes” to Q11) As a result of inflation and rising prices, have you struggled to make rent or mortgage payments?

63% answered “yes”

37% answered “no”

13. (If “yes” to Q12) How much longer do you anticipate you’ll be able to make rent or mortgage payments before it becomes a very serious problem?

31% answered “It already is a very serious problem.”

30% answered “1-3 months”

22% answered “4-6 months”

8% answered “7-9 months”

10% answered “10 months or more”

14. Do you currently own any types of supplementary insurance products (i.e. disability, life, pet, dental, vision)?

64% answered “yes”

36% answered “no”

15. (If “yes” to Q14) As a result of inflation and rising prices, have you struggled to pay monthly premiums on your supplementary insurance products?

54% answered “yes”

47% answered “no”

16. (If “yes” to Q15) Are you considering canceling any of your supplementary insurance coverage as a result of inflation and rising prices?

77% answered “yes”

23% answered “no”

17. As a result of inflation and rising prices, have you had to start using an emergency savings fund to cover costs

59% answered “yes”

41% answered “no”

18. (If “yes” to Q17) If inflation and rising prices continue, how much longer do you anticipate your savings will last?

23% answered “less than 1 month”

31% answered “1-3 months”

27% answered “4-6 months”

11% answered “7-9 months”

9% answered “10 months or more”

19. As a result of inflation and rising prices, have you increased your credit card and/or Buy Now Pay Later usage (Select all that apply)?

47% answered “yes, credit card”

29% answered “yes, Buy Now Pay Later”

37% answered “none of the above”

20. As a result of inflation, rising prices, and the current economic climate, are you worried about your job security?

52% answered “yes”

48% answered “no”

21. Compared to this time last year, do you believe you are in a better or worse financial situation?

23% answered “better”

52% answered “worse”

26% answered “about the same”

22. A year from now, do you think you will be in a better or worse financial situation?

41% answered “better”

31% answered “worse”

29% answered “about the same”

Access the full survey here.

 

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