New research from Empower* shows the profound impact of economic uncertainty on Americans lives, as a quarter of those surveyed say they’ve delayed a major purchase such as a home or car and another 30% are seeking out side hustles to make ends meet.

From inflation – by far the top concern – to the potential for additional bank failures, here’s how Americans responded when asked their level of concern about current issues disrupting the economy:

Rising interest rates: With 49% of respondents concerned about rising interest rates making it more difficult to take out a loan, a quarter of Americans are currently delaying a major purchase such as a car or home. One thing they aren’t putting on hold: Finding a new job. Only 6% said they had put off job hunting, despite 44% of Americans saying they are concerned with the job market.

If you’re holding off on a major transaction, there are several accounts to consider for storing your funds that won’t expose your money to market volatility, while still providing the opportunity to earn interest.

“If you’re saving for a financial goal and plan to use the funds within the next 12-18 months, you might consider letting it sit in a high yield cash account or short-term treasury bonds,” says Michelle Brownstein, CFP® and Vice President, Private Client Group for Empower. “Both vehicles allow the funds to earn interest until they are used for the purchase.”

Inflation: 3-in-4 Americans (72%) said they are worried about inflation increasing the cost of everyday goods, with nearly 60% cutting back spending as a result. Women were 8% more likely than men (62% vs. 54%) to say they’re trimming their budget. One-third (30%) of Americans said they are looking into a side hustle to make ends meet.

When reviewing your budget, Brownstein suggests making sure you’re still working in monthly savings.

“Even in an uncertain economy, saving should remain a top priority – as they say, you have to pay yourself first. In terms of where you’re feeling uncertain, perhaps about your job stability, ensuring you have a sufficient emergency fund is key. Additionally, carefully considering all non-essential purchases is important as well. This means that daily Starbucks habit might have to go and you might want to hold off on buying the hottest new phone when it hits the market.”

Bank failures: Half of Americans said they are concerned with the failure of more banks, but just 8% said they had responded by moving their funds across multiple financial accounts. Despite recent market volatility, just 6% of Americans surveyed have converted their investments to cash.

Even in times of uncertainty, Brownstein says there is often financial opportunity. “Now is not the time to sit on the sidelines in a bunch of cash which is getting eroded by inflation. Instead, consider maintaining a diversified, disciplined investment approach which naturally takes advantage of possible opportunities through rebalancing (aka buying lower, selling higher).”

Brownstein adds that holding too much money in cash can be a risky move for a long-term strategy.

“Generally, keeping 3-6 months of expenses in cash is a good idea along with cash for purchases happening in the near term.  Money slated for long term use can be invested to help avoid losing purchasing power to inflation.” It is important to note that investing does involve risks and can lead to the loss of your initial investment.

1-in-5 Americans, or 20% of respondents, said they are making no changes to their finances despite economic uncertainty.

“A sound plan and investment strategy is built for both good and bad markets – so if you have a good plan in place the current environment shouldn’t cause you to change course,” Brownstein says. “If you are doing nothing out of fear, that says you’re in the wrong plan as you should feel confident in your plan in both good and bad environments.”

Student loans: 1-in-5 Americans is very concerned with the Supreme Court’s decision whether to cancel student debt. On the flipside, 1-in-4 said they are not concerned at all, highlighting the divisiveness of the issue.

Whether you’re planning how to pay down student debt, moving money to a high yield cash account, or have questions on how to beat inflation, chances are like most Americans your financial life is complex and unique. Creating a plan and feeling more confident in your finances starts with taking stock of where you stand now.

"This means getting a clear picture of your assets and debts (aka net worth), spending, saving and income trends.” Brownstein says. “Then, think what you are trying to accomplish (retire at a certain age, take a trip next year, etc). This will allow you to put a plan in place, which is often empowering.  You can use the free Empower Personal Dashboard^TM to get a handle on where things are at and see if you are on track to meeting your long-term goals.”
 

* Survey Methodology: Empower contracted Morning Consult to conduct a poll March 24-27, 2023 among a national sample of 2200 US adults. The interviews were conducted online, and the data are weighted to approximate a target sample of adults. Results from the full survey have a margin of error of plus or minus 2 percentage points.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. No part of this blog, nor the links contained therein is a solicitation or offer to sell securities. Compensation for freelance contributions not to exceed $1,250. Third-party data is obtained from sources believed to be reliable; however, Empower cannot guarantee the accuracy, timeliness, completeness or fitness of this data for any particular purpose. Third-party links are provided solely as a convenience and do not imply an affiliation, endorsement or approval by Empower of the contents on such third-party websites. 

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Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements. 

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