- Nearly half of investors say rising inflation is causing them stress and anxiety.
- Majority are changing their spending behavior, cutting back on discretionary expenses including dining out and entertainment.
- One-in-four investors (25%) cancelled a vacation planned for the year ahead due to rising inflation.
- Majority of investors believe the US economy is headed for a recession in the next 6-12 months.
- Generation X is significantly more concerned than Millennials and Boomers about the economic outlook, maintaining their current standard of living, retiring on time and affording expenses in retirement.
- Less than half of investors are confident they will reach their financial goals due to rising inflation.
State Street Global Advisors, the asset management business of State Street Corporation (NYSE: STT), today announced the findings of its Inflation Impact Survey, which reveals how inflation is influencing Americans’ spending, saving, and investing behavior. The survey found that with inflation on the rise, over two-thirds of investors (67%) are concerned about our country’s economic outlook over the next 12 months, with over half also expressing concern over market volatility (57%) and the value of their current investments eroding (59%). Notably, Generation X is significantly more concerned than Millennials or Boomers about the effects that inflation, the stock market and economy could have on their personal financial situation.
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49% of investors do not think inflation has peaked according to State Street Global Advisors' Inflation Impact Survey. (Graphic: Business Wire)
In the past 12 months, rising inflation has caused the greatest proportion of investors (51%), to curtail discretionary spending such as dining out and entertainment. Just over a third spent less on vacations or delayed a major purchase (35%), and 29% have cut back on essential expenses like groceries and gasoline.
“As Americans work to defend themselves against the corrosive effect of inflation on their finances, we’re encouraged to see the majority are making tradeoffs in discretionary spending, rather than sacrificing contributions to their long-term savings goals,” said Brie Williams, head of Practice Management at State Street Global Advisors. “Notably, less than one-quarter of Americans were willing to curtail contributions to their retirement savings or their child’s education savings, which demonstrates a firm commitment to their long-term financial goals.”
Has Inflation Peaked Yet?
With so many already tightening their belts, it is no surprise that 58% of investors agree that the US economy is headed for a recession in the next six to 12 months, with 47% agreeing with the statement: “Inflation is causing me stress/anxiety.”
Furthermore, they don’t believe the worst is over. Less than two-in-ten investors (17%) believe inflation has already seen its peak. That’s in sharp contrast to the 49% who do not think inflation has peaked.
Millennials and Inflation: Glass Half-Full?
Millennials are significantly more optimistic that inflation has already topped out than Gen X and Boomers; 43% of Millennials believe inflation has peaked, compared to just 5% of Gen X-ers and Boomers.
Record high inflation isn’t dampening Millennials’ optimism that they’ll reach their financial goals, either; 63% of Millennials are confident they can reach their financial goals, while overall, the majority of investors believe inflation is an obstacle. Less than half of Gen X-ers (32%) and Boomers (40%) are confident they’ll reach their financial goals due to rising inflation.
Sandwich Generation Shows Signs of Distress
In June 2021, concern about rising inflation was similar across generations, however, in June 2022, significantly more Gen X-ers (88%) indicated concern compared to Millennials (72%) and Boomers (70%).
When it comes to the overall economic outlook for our country in the next 12 months, 76% of Gen X-ers are concerned, compared to 60% of Millennials and 65% of Boomers.
The outlook for their personal financial situation wasn’t much better: 56% of Gen X-ers are worried about maintaining their current standard of living, compared to 46% of Millennials and 43% of Boomers.
Being able to afford to retire when planned is another worry with 59% of Gen X expressing concern over this, compared to 41% of Millennials and 31% of Boomers. Being able to afford expenses in retirement was also a bigger worry for Gen X, with 56% expressing concern, versus 41% of Millennials and 44% of Boomers.
Generation X Takes Action Against Inflation
Examination of the money moves each generation has made in the last 12 months reveals significantly more members of Generation X have cut back on spending compared to Millennials and Boomers.
A greater percentage of Gen X-ers than Millennials and Boomers have seen their finances derailed by inflation and have had to cut back on discretionary spending like dining out or entertainment (61%) and essential purchases like groceries or gasoline (41%), or delayed a major purchase like a vehicle or home appliance (39%).
“These are challenging times for many Americans. About half of all investors believe that the lessons learned by navigating the current inflationary environment will have a lasting impact on their spending and saving habits moving forward,” Williams noted. “Making prudent financial decisions during times of uncertainty could make committing to a budget or investment discipline easier when the economy improves. For those looking for help managing through the uncertainty, now is the time to talk to a financial advisor to make sure they’re on track to meet their financial goals.”
For more on SPDR’s point of view on the market, economy and inflation read our 2022 Mid-Year Outlook and 5 Burning Questions Give Investors Insight: Durable Rebound or More Pain to Come?
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About State Street Global Advisors’ Inflation Impact Survey
State Street Global Advisors, in partnership with A2Bplanning and our field partner, Prodege, conducted an online survey among a nationally representative sample of adults. Data was collected from June 28 – July 5, 2022. For our Custom “Inflation Impact Survey,” we analyzed 243 adults with Investable Assets (IA) of $250K or more.
About SPDR Exchange Traded Funds
SPDR ETFs are a comprehensive family spanning an array of international and domestic asset classes. The funds provide investors with the flexibility to select investments that are aligned to their investment strategy. For more information, visit www.ssga.com.
About State Street Global Advisors
For four decades, State Street Global Advisors has served the world’s governments, institutions and financial advisors. With a rigorous, risk-aware approach built on research, analysis and market-tested experience, we build from a breadth of index and active strategies to create cost-effective solutions. As stewards, we help portfolio companies see that what is fair for people and sustainable for the planet can deliver long-term performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing new ways to invest. As a result, we have become the world’s fourth-largest asset manager* with US $3.48 trillion† under our care.
*Pensions & Investments Research Center, as of 12/31/21.
†This figure is presented as June 30, 2022 and includes approximately $66.43 billion of assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.
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