Retail Survey: Middle Class Households Struggle to Cover Expenses as Prices Rise
A survey by a major retail group finds that inflation is making it harder for middle-class households to cover their expenses as the winter holidays approach.
The National Retail Federation reported Thursday that 65% of upper-middle-class households earning more than $100,000 a year say they are dipping into their savings to cover rising prices. 33% are taking on more debt on their credit cards and 34% are taking out loans.
According to NRF’s analysis of U.S. Census data, households earning more than $75,000 a year were twice as likely in August as a year earlier to report difficulty covering costs.
“The economic situation in the United States is troubling,” NRF chief economist Jack Kleinhenz said in a statement. “Consumer confidence is down, the growth rate of consumer spending has slowed, and economists and consumers are worried about the possibility of a recession, all reflecting persistently high inflation and falling interest rates. rise.”
Conducted from September 23 to 27, the survey found that low-income households were struggling the most. Mr. Kleinhenz cited rising gasoline, auto and restaurant prices as causing much of the pain.
Among households earning less than $50,000 a year, only 28% said they would “earn enough” with the higher prices to pay their bills. 36% said they should use their savings and 31% said they should borrow money, go into debt or sell assets.
In the middle of the income bracket, 41% of households earning between $50,000 and $100,000 a year said they would earn enough this year. 41% said they should use their savings and 15% said they should borrow, go into debt or sell assets.
Still, 62% of 2,000 consumers surveyed said spending money on gifts and holiday celebrations is important to them, even if it means cutting back on other expenses.
At least 40% of respondents said they have switched to cheaper alternatives, search for discounts more often, shop at discount stores and buy different brands. And 59% said they eat at home more often.
The NRF also reported that consumers are more inclined to shop early for the holidays this year, perceiving that retailers have increased their holiday offers.
The survey found that 75% of consumers said it was better for them financially to shop for holidays now. In comparison, only 25% said it was better to wait because “the best deals come later in the year”.
According to the most recent federal data, growth in consumer spending barely outpaces inflation as the holidays approach.
The Census Bureau reports that overall retail sales rose 9.1% year over year in August, slightly above the 8.6% increase in inflation calculated for these sectors by the Bureau of Economic Analysis.
The NRF’s chief economist said a recession would be “likely mild” as Americans find ways to keep spending.
“Just because people are saving more and looking for deals doesn’t mean they aren’t spending more,” Kleinhenz said in an email. “Consumers have a savings surplus built up during the pandemic that can be spent even as they set aside more of their paychecks, and getting a deal just means they’re getting more for their money.”