By Nathalie Voit
About two-thirds of Americans (64%) feel the Federal Reserve should do more to combat inflation, according to new survey results from the Nationwide Retirement Institute released on March 10.
Most of those who believe the Fed should do more were baby boomers (72%). However, despite the all-around desire for increased action from the Fed, Americans across all age cohorts are more likely to feel worried (37%) than hopeful (23%) about the impact of interest rates hikes on their finances.
“Following months of decades-high inflation, the war between Russia and Ukraine is intensifying inflationary pressures, worsening supply chain snarls, and spiking gas prices. It’s understandable that consumer sentiment is very low right now,” said Nationwide’s Chief of Investment Research Mark Hackett in a press release. “But Americans should know that the economy is actually performing better than people think, job security is extremely strong, and even though we’ve seen a lot of market volatility, consumers have record wealth due to equity market and home price rallies.”
The survey results also reveal that 9 in 10 Americans (90%) are worried about rising inflation, with more than half (58%) reporting a decrease in purchasing power.
Additionally, over half of consumers expect higher prices to stick in the long run (56%). Just 28% viewed the current price increases as temporary. Older Americans (Gen Xers and boomers) were more likely than younger Americans to perceive inflation as permanent.
Concerns over ongoing inflation are leading many Americans to cancel or postpone major life events, particularly younger generations. Over one-third of Gen Z (35%) and millennials (34%) have already postponed or are considering delaying plans to start a family. One in three Gen Z (33%) and another 28% of millennials have already canceled or are considering canceling plans to get married. Regarding retirement plans, over one in 10 (13%) Americans of retirement age (Gen Xers and baby boomers) have already postponed or are weighing postponing plans to retire.
In addition to delaying major life milestones, consumers across all ages are updating their daily habits to include dining out less (48%), driving less (35%), relying more on credit cards (21%), searching for a higher paying job (19%), moving in with family to reduce spending on rent (14%), and reducing contributions to their 401(k) (10%).
“While it’s understandable that consumers are relying more on credit cards and reducing their retirement plan contributions to soften the short-term effects of inflation, it’s important for consumers to consider the implications on their long-term financial strategy,” said president of Nationwide Financial’s annuity business Eric Henderson. “This is an opportunity for consumers to work with a financial advisor to revise their spending budget so they can make day-to-day ends meet while still save for future goals, like retirement.”
