Surging Inflation Is Even Impacting the Wealthiest Americans
High-income consumers drive three quarters of overall spending, but they may have to cut back due to inflationary pressures.
Fast-rising costs on everything from food and rent to gas and used vehicles appear to have put a major dent in the spending habits of American consumers.
As noted by Bloomberg economists, typical American households can now expect to pay an extra $5,200 this year due to high-inflationary pressures. Broken down, that comes out to an eye-popping $433 in extra monthly costs.
All Americans Impacted
A new survey conducted by CNBC and Momentive revealed that rising concerns about inflation and the risk of recession are driving Americans to spend less—and this also includes those making more than six figures annually.
“These financial stress points are not limited to lower-income consumers,” CNBC wrote. “The survey finds American[s] with incomes of at least $100,000 saying they’ve cut back on spending, or may soon do so, in numbers that are not far off the decisions being made by lower-income groups.”
According to Mark Zandi, the chief economist at Moody’s, the high-income consumer demographic is highly important to the U.S. economy; although it only represents one-third of all consumers, it is responsible for up to three-quarters of overall spending.
“If the high-income consumers are out buying, we won’t see a big impact on raw consumer activity,” he told the business news outlet.
Lower-Income Households Suffer
Still, the poll found that lower-income households are the most at risk from inflationary pressures and the financial anxiety associated with them. The survey showed that 57 percent of Americans with incomes less than $50,000 admit that they are under more stress compared to last year, while only 45 percent of those with incomes of $100,000 or more said the same.
In addition, over half of respondents with household incomes under $50,000 acknowledged that they have already cut back on multiple expenses due to rising prices. For those with $100,000-plus income levels, the cutbacks are similar when it comes to eating out at restaurants, going on vacations, and purchasing a vehicle.
“People making six-figure incomes are almost as worried about inflation as people making half as much—and they are just as likely to be taking steps to mitigate its effect on their lives,” Laura Wronski, senior manager of research science at Momentive, told CNBC.
“Inflation is a problem that compounds over time, and even high-income individuals won’t be insulated from the second- and third-order effects of price increases,” she continued.
The survey findings come on the heels of a separate poll released by Salary Finance, which found that more than 75 percent of working Americans stated that inflation has negatively impacted their finances over the past year. About 20 percent of workers admitted that they regularly run out of money between paychecks—a figure that is up from 15 percent last year.
Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.