81 Percent of Americans Worried About Recession in 2022: Survey

Americans eating out less, driving less, spending less, and canceling subscriptions

A Mobil station in Los Angeles shows gas prices are rising to record highs on March 7, 2022. Jill McLaughlin/The Epoch Times

A significant number of Americans are concerned about rising prices and worried about the country sinking into recession this year, according to a CNBC/Momentive poll on financial literacy.

Eighty-one percent of adults—91 percent of Republicans, 81 percent of Independents, and 73 percent of Democrats—expect recession to set in this year, according to the results of the poll published on April 5.

Respondents who were under more financial stress last year are more likely to expect a recession, compared with those under less financial stress.

With regard to inflation, 76 percent of adults say they are worried about being forced to rethink financial choices due to higher prices. Adults who claim to have a “good” or “excellent” financial literacy are slightly less worried about having to rethink choices, when compared with those whose financial literacy is “poor” or “fair.”

“Seniors 65+ are least concerned: 64 percent are worried higher prices will force them to rethink their financial choices vs. adults 18-34 (77 percent) and 35-64 (81 percent),” the survey says.

“Republicans are more likely than Democrats to say they’re worried higher prices will force them to rethink their financial choices (85 percent vs. 68 percent).” The poll, which saw the participation of 3,953 adults, was conducted on March 23 and 24.

Roughly half the adults said they think about rising prices “all the time,” while 44 percent say “occasionally” or “sometimes.”

In terms of household income, 55 percent of those earning below $50,000 a year think of increasing prices “all the time,” as against 45 percent of those earning $50,000 to $100,000, and 40 percent of those making $100,000 or more.

For 21 percent of respondents, gas prices were the biggest source of financial stress in 2021. This was followed by worries about housing costs at 16 percent and food costs at 13 percent. Republicans were more than twice as likely as Democrats to say gas prices were the biggest source of financial concern.

Sixty-one percent disapproved of how President Joe Biden is handling inflation, with 93 percent of Republicans holding such a view, compared with 71 percent of independents and 28 percent of Democrats.

Higher prices are forcing Americans to scale down spending, with 53 percent claiming they have cut down on outdoor dining over the past six months; 39 percent drove their vehicles less; 35 percent canceled a subscription, and 32 percent switched from a branded product to a generic one.

Politically, 18 percent of Democrats claim they haven’t scaled down their spending in the last six months as compared with 10 percent of Republicans.

Declining consumer spending is bad news for the country as it accounts for over two-thirds of America’s economic activity. Consumer spending rose marginally by just 0.2 percent in February, according to the U.S. Commerce Department. This coincides with the 7.9 percent spike in CPI inflation for the month, the highest level in 40 years.

Though hourly wages increased by 5.6 percent in March, when compared with 2021, the high rate of inflation basically erodes much of the incremental benefit. Households are choosing to save, rather than spend, their accumulated savings.

The declining consumer spending triggered by high inflation will likely push the United States into a recession by next quarter, former Federal Reserve Governor Lawrence Lindsey, said in an interview with CNBC.

“I’m very worried about having one to 1.5 monthly inflation prints. That’s gonna push consumer purchasing power down by about 2 points on top of the 2.5 points it has already declined since the beginning of 2021. You can’t have a consumer absorb that much of a shock quickly without having a recession,” Lindsey said.