4 in 10 Americans Saving Or Investing Less Than Usual As Recession Looms – Forbes Advisor

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Times are running out for Americans – and it’s beginning to show in their finances.

The latest Forbes Advisor-Ipsos Consumer Confidence Biweekly Survey found that Americans are relying on more than just their monthly income to weather the ravages of inflation on the economy. Twenty-eight percent of respondents say they are getting more out of their savings than usual, an increase of four percentage points since the first question was asked in November 2021.

Conducted by Ipsos, the survey measures consumer sentiment over time.

Overall, consumer sentiment appears to be on hold as households wait for monetary policy implemented by the Federal Reserve to cool the economy – or plunge it into recession. Consumer confidence is at 49.5 this week, just half a point down from two weeks ago.

Consumers in a vulnerable position should a recession hit

One of the more worrying aspects of this week’s survey results is that consumers are not only spending their savings, they are also saving less than before.

According to this week’s survey, 41 percent of consumers say they are investing or saving less money than usual. This, combined with increased spending from their reserves, could put them in a vulnerable position should the economy take a nosedive.

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Bloomberg Economics’ model forecasts, released this week, said there was a 100 percent chance of a recession within the next year. Executives from some of the country’s largest corporations also warned this week of an impending economic slump.

The state of the economy has become a focus for many in recent months as the Federal Reserve hikes interest rates to tame inflation. Although the September Consumer Price Index (CPI) report showed a slight month-on-month decline in the inflation rate, daily consumer prices, including those for food and accommodation, remain challengingly high.

Read more: The Fed is raising rates by another 75 basis points: How it may affect your money

High prices not only force consumers to tap into their savings; they discourage them from making large purchases. According to the survey, more than two-thirds (68%) of respondents are less comfortable about buying a home or car than they were six months ago. As mortgage rates soar above 7%, mortgage application rates have fallen to a 25-year low, fueling fears a housing market collapse is also imminent.

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Bad news for Democrats ahead of Midterms

In addition to keeping an eye on the economy, Americans are preparing to vote in the Nov. 8 midterm elections. Much is at stake in the vote, including the fate of the 50-50 Senate split.

This week’s results show Democrats have their work cut out before them on the campaign trail. Broad consumer confidence among Republicans fell to its lowest level since Ipsos began tracking pandemic-era sentiment in March 2020. Party members’ concerns about the health of the economy could encourage more Republicans to vote in the midterms.

Meanwhile, respondents who identified as independents expressed their current consumer confidence – defined as confidence in their financial situation; local economy; Purchasing, employment and investment – down seven points since last survey.

Although most independents are party-leaning, according to a 2019 Pew Research Center study, 7% of them allow themselves to be influenced in one way or another. New swing voter focus groups are finding that independents are both “bored” with Democrats and hoping to avoid another era of Trumpism, making it difficult to predict which party they will vote for — or if they will abstain altogether will.

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With the scope for gaining control of the Senate tighter than ever, any vote, whether for Republicans or Democrats, could have a significant impact on how control of the chamber is decided.

Although President Joe Biden continues to claim that the country’s economy is resilient, this week’s consumer sentiment results show Americans are not so confident.

Read more: Midterms and money: How the election could affect your wallet

Methodology: Ipsos, which surveyed 915 respondents online on October 17 and 18, 2022, made the results exclusively available to Forbes Advisor. The survey is conducted weekly to track consumer sentiment over time, using a series of 11 questions to determine whether consumers feel positively or negatively about the current state of the economy and where it is heading in the future.


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