Financial insecurity among Americans hits new high

investmentnews.com:

While optimism about the US economy’s direction has seen an uptick, an unprecedented number of Americans are reporting a heightened sense of financial insecurity, according to a new study from Northwestern Mutual.

In its 2024 Planning and Progress Study, the insurance and financial giant found 54 percent of US adults anticipate a recession in 2024, a notable decrease from the 67 percent who expected that in 2023. This shift in sentiment is reflected across various age groups, signaling a broad-based increase in economic optimism.

Despite this more positive outlook on the economy, Northwestern Mutual’s research found a third of Americans (33 percent) do not feel financially secure, marking the highest recorded level of financial insecurity since its inception.

Financial insecurity is largely driven by concerns over inflation, with more than half of the participants expecting inflation rates to climb further in the coming year. Alarmingly, only 9 percent of Americans believe their household income is sufficiently outpacing inflation, pointing to the impact of rising prices on financial well-being.

“Inflation is considered the greatest obstacle to financial security, coming in well ahead of factors such as lack of savings and debt,” noted Christian Mitchell, chief customer officer at Northwestern Mutual.

The study also highlights concerns beyond inflation, with government disfunction and the 2024 presidential election emerging as significant sources of anxiety that could impact Americans’ financial futures. Underscoring the complex web of factors that influence economic sentiment across the country, a third of respondents cited government disfunction (34 percent) and the presidential election (33 percent) as key worries.

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