CNET Survey Finds Inflation Anxiety Among 93% of Americans

A recent survey by CNET has found that 93% of Americans are worried about inflation and how it's affecting their finances.

22:10 20 June 2024

A recent survey by CNET has found that 93% of Americans are worried about inflation and how it's affecting their finances. This widespread concern reflects the struggles many face as prices for everyday items continue to rise despite the Federal Reserve's efforts to control inflation by raising interest rates.

The survey included responses from a wide range of people and showed that inflation is causing significant changes in spending habits. Over half of the respondents (53%) reported cutting back on nonessential spending, while 16% use credit options like credit cards and Buy Now, Pay Later plans to manage their finances. 

Bola Sokunbi, founder of Clever Girl Finance and a member of CNET’s expert review board, noted that these findings are unsurprising given the current economic pressures.

Different generations are dealing with inflation in various ways. For example, younger and older Boomers (59%) have cut back on nonessential spending, followed by Gen X (57%). Gen Z and Millennials are more likely to dip into their savings to cover essential expenses, with 23% of Gen Z and 24% of Millennials reporting this behavior. 

Additionally, 16% of Gen Z and 18% of Millennials rely on credit. Millennials are postponing major purchases the most, with 34% delaying car purchases, 27% waiting to buy homes, and 38% putting off vacation plans. Long-term savings goals are also being affected, with 43% of Gen X and Millennials pausing their efforts.

Grocery costs are a significant concern, with 77% of respondents experiencing sticker shock at the supermarket. “There has been a lot of discussion among friends and on social media about just how expensive food has become,” said Sokunbi. 

While dining out and takeout prices have also risen, the cost of essential groceries is the most challenging. The survey also highlighted other areas where inflation is felt, including higher gas prices (54%), increased costs for dining out (51%), utilities (41%), clothing (30%), travel (29%), electronics (22%), and subscriptions (17%).

Inflation is impacting nearly every aspect of Americans' financial lives. The survey found that 84% of US adults have seen their household budgets and overall finances affected. Over half (53%) have reduced nonessential purchases, and 41% report that sticking to a budget has become more complex. 

Long-term savings are also taking a hit, with 33% saving less due to rising expenses, 20% using savings to cover essentials, and 16% relying on credit. Some respondents have even tapped into their 401(k) accounts (8%) or taken out home equity loans (3%) to manage significant expenses. Additionally, understanding what is loan contingency is becoming crucial for those facing these financial challenges.

Inflation is delaying long-term goals and hindering Americans from paying off debt. One-third of US adults surveyed report that everyday expenses are cutting into their income, reducing their ability to save for goals like retirement. 

Significant respondents are postponing major plans, with 34% delaying vacations, 29% holding off on car purchases, and 17% waiting to buy homes. Additionally, 16% are turning to credit options to make ends meet, often without paying off their balances in full. Some have borrowed from their 401(k) accounts (8%) or taken out home equity loans (3%).

Despite a slight dip in overall credit card debt in the first quarter of the year—from $1.13 trillion in Q4 of 2023 to $1.12 trillion—it remains at a record high. The high cost of borrowing, driven by the Fed’s interest rate policies, adds to the challenge of managing debt during inflationary times. 

Sokunbi emphasizes that taking on new debt is often unavoidable and not necessarily a sign of poor financial management. Unexpected events like job loss, medical emergencies, or major car repairs can force even the most prudent savers to rely on credit.

Financial experts recommend prioritizing financial goals and adopting creative spending strategies to navigate these difficult times. Budgeting is crucial to balancing expenses and goals. 

Kelly Ernst, a CNET Money editor, suggests using apps that track daily transactions from bank accounts to monitor spending in real time and make necessary adjustments. "Understanding exactly where your money goes helps you manage daily expenses and stay on track with long-term goals," Ernst advises.

For those hardest hit by grocery store sticker shock, opting for store-brand products, enrolling in loyalty programs, searching for coupons, and using cashback credit cards can offer relief. Evan Zimmer, an editor for CNET Money, recommends using credit cards that offer cashback rewards for groceries. "I use a card that gives 6% cash back at supermarkets on up to $6,000 per year in purchases. It can make a significant difference over time," Zimmer noted.

While taking on debt may be unavoidable for some, choosing the right type of debt and maintaining a budget is essential. Sokunbi emphasizes that even those relying on credit can benefit from budgeting to minimize new debt and create a realistic repayment plan once finances stabilize. 

Even in difficult times, making small contributions to savings and retirement accounts can build financial resilience. "Even small savings from each paycheck add up," she said. "Consistent contributions grow over time, and employer matches on retirement contributions are like free money."

Building an emergency savings fund is crucial for families navigating these challenging economic times. Setting aside small amounts from each paycheck can create a financial buffer for unexpected expenses. This proactive approach helps prepare for the unexpected and reduces the need to rely on credit.

The CNET survey underscores the widespread impact of inflation on Americans. As families navigate these challenges, proactive financial management and informed decision-making are more important than ever. Staying informed, budgeting effectively, and using available resources can help mitigate the impact of inflation and ensure financial stability in these uncertain times.