Nine in 10 Americans are worried about price increases in the next year.
As a result, they are saving money and delaying significant life milestones such as buying a home or having children.
WSFS Bank’s Annual Money Trends Study surveyed 1,500 Greater Philadelphia and Delaware region consumers and 1,500 consumers nationally to measure current spending and saving trends, as well as economic thoughts, among adults aged 18 to 55.
High inflation, rising costs of food and fuel and increased interest rates are influencing American spending in 2022, and keeping economic confidence low. According to the study, for in 10, or 41 percent, of regional residents feel the local economy is strong this year, which shows a greater confidence than they have in the American economy, which is only 33 percent.
This low confidence is a factor motivating Americans to increase their savings and reduce spending. More than half of survey respondents, 54 percent regionally and 53 percent nationally, say they are doing this to ensure future financial stability.
“While the impacts of inflation and rising rates are certainly challenging to consumers’ budgets, it’s a good sign that many are recognizing the importance of saving to build toward future purchases and overall financial wellbeing,” Shari Kruzinski, Executive Vice President and Chief Customer Officer for WSFS Bank, said in a press release. “It’s also encouraging to see that half of Gen Zers in the region are saving more than they did last year, with nearly half of them (47 percent) saving for a large purchase like a home or car. Saving more now to better position their future finances is a smart move.”
Changing behavior
Economic uncertainty, according to the study, has Americans cutting back on non-essential purchases. Four in 10, 43 percent regionally and 42 percent nationally, are proactively setting financial goals. This is an indication that American will renew plans for big spending and borrowing in the not-too-distant future.
For now, however, four in 10 Americans, both regionally and nationally, are less focused on life milestones, such as buying a home or having children. Thirty-nine percent of aged 25 to 24 and 34 percent of aged 35 to 44 in the region are blaming inflation. Across the nation, 37 percent of aged 25 to 34 and 34 percent of aged 35 to 44 blame not having children on inflation.
What about Christmas?
Thirty-six percent of regional respondents said they are saving for this holiday season, as is 28 percent nationally. More than half are interested in shopping locally. Forty-three percent regionally will buy gifts locally, up from 28 percent in 2021.
However, other spending will decrease, such as dining out, according to the survey results. Of regional spenders, 46 percent plan to eat and drink out less compared to 38 percent in 2021. Forty-one percent plan to spend less overall on gifts this holiday season, up from 34 percent last year. Regional consumers are also planning to spend less on traveling this year, 44 percent this year compared to 40 percent last year.
Gen Zers are leading holiday spending with 31 percent planning to spend more than last year compared to 24 percent overall and about the same plan to spend more dining out.
“Over the past few years, many businesses have adapted to changing consumer preferences to provide the products and services they are looking for during the holidays and throughout the year,” Kruzinski said. “While this holiday season is expected to be challenging, local businesses have an opportunity to lean on their partnerships, tap into the spending power of Gen Zers, create unique customer experiences and special offers, and bolster sales through an increased desire to ‘shop local.’”
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Rebecca Barnabi
