Consumers feel 13% less confident about their financial outlook now than they did just a year ago, with the overall dip in optimism representing the second largest year-over-year drop over the past 12 months.
The bleak forecast comes courtesy of a new WalletHub Economic Index monthly survey that evaluates economic prospects based on 10 components of consumer sentiment, including finances, purchasing plans and employment opportunities.
“The main factors that are making consumers feel less confident include increased stress about money in general and a lack of confidence regarding their finances,” WalletHub analyst Jill Gonzalez told The Center Square. “These are mostly due to high inflation and the overall difficult and unpredictable current economic conditions. Inflation is putting a serious strain on people’s budgets, forcing them to reduce their expenses to just the necessities and significantly lowering the likelihood of making a big purchase in the near future.”
With a growing number of individuals also expressing less confidence about having a job in six months compared to a year ago, researchers also note that stress levels related to money are about 15% worse than they were in 2022.
All of the uneasiness comes as no great surprise, Gonzalez said, given all the recent twists and turns born in a volatile economy.
Gonzalez said lawmakers have much work to do if they hope to allay any of the fears consumers now feel stemming from the way they view the country’s financial outlook.
“Right now, inflation is the main issue contributing to the decreasing consumer confidence in the economy,” she said. “The key thing that authorities should keep on doing is tackling this problem. Of course, this is not something that can be resolved overnight. But once inflation is under control, investments, consumer spending and business spending will increase and the overall perception on the financial outlook will improve.”