As inflation continues to rise and the economic mood in America darkens, even higher-income consumers are beginning to feel the financial strain and are cutting back on spending. A new CNBC survey reveals that while lower-income households are already making sacrifices, those earning $100,000 or more are also starting to reduce their expenditures in key areas such as dining out, travel, and car purchases.
With 60% of U.S. consumers living paycheck to paycheck, it’s not surprising to see spending cutbacks. The survey indicates that financial stress is not limited to lower-income groups; higher-income households, which play a critical role in driving the economy, are also showing signs of pulling back due to concerns about rising prices and the risk of a recession.
While the strong job market and wage gains have provided some relief, the persistent price spikes in essential categories like food, gas, and housing are leading Americans across all income levels to rethink their financial decisions. The survey highlights that inflation is affecting everyone, with high-income consumers almost as concerned as those earning half as much.
Despite these worries, consumer spending remains robust, supported by a strong job market, low unemployment, and high asset prices. However, as inflation persists and the economic outlook remains uncertain, experts predict a slowdown in consumer spending, particularly on discretionary items, in the coming quarters.
The Conference Board’s latest confidence index reflects this trend, showing a slight uptick in present confidence but a decline in future expectations due to rising prices. As inflation continues to impact purchasing power, particularly among lower-income households, the broader concern about the economy’s trajectory is likely to influence spending behavior in the months ahead.
Overall, while high-income consumers are still relatively confident, the ongoing inflationary pressures and the potential for further economic disruptions are prompting many to adjust their spending habits, signaling a shift in consumer behavior as the year progresses.
