JUNE 9, 2022
Rising energy prices have been feeding inflation, which is already at its highest levels in four decades. – Rick Bowmer/AP
Most Americans expect inflation to get worse in the next year and are adjusting their spending habits in response to rising prices, according to a poll conducted by The Washington Post and George Mason University’s Schar School of Policy and Government.
Inflation, which is near 40-year highs, has lifted the cost of just about everything, including essentials such as gas, groceries and housing. Overall prices are up 8.3 percent in the past year.
Families are feeling the pinch. Nearly 9 in 10 Americans say they’ve started bargain-hunting for cheaper products, and about three-quarters are cutting back on restaurants and entertainment, or putting off planned purchases, according to the Post-Schar poll conducted in late April and early May.
The findings come as inflation takes center stage as a leading economic and political hurdle for the Biden administration. After months of dismissing price hikes as a short-term shock, the Federal Reserve recently began raising interest rates in hopes of cooling the economy enough to temper inflation. Even so, two-thirds of Americans (66 percent) expect inflation to get worse in the coming year, while 21 percent expect it to get better and 12 percent think it will stay the same, the poll finds.
“We’re cutting back on everything — and I mean everything,” said Bethany Davis, who lives with her boyfriend in Barbourville, Ky. “Gas, meat, bread, it’s all expensive as hell. One moment you think you can afford to buy something, then you go to the store and it’s like, ‘Nope, can’t get that anymore either.’ ”
Davis, 20, has stopped eating meat, is cutting back on showers and laundry, and has been rationing trips to the store to save on gas. She and her boyfriend are down to one, maybe two, meals a day that often consist of white bread, Velveeta cheese and $1 bags of rice, she said.
After more than a year of steadily rising prices, many Americans are beginning to rethink their spending habits to account for inflation. About 6 in 10 people say they are driving less, minimizing their use of electricity and saving less, while about half say they are trying to buy products before prices go up, the poll finds. And just under 3 in 10 say they have taken on a second job or worked more hours as a result of inflation.
The poll’s results could also be an early warning sign of the path of inflation in the months to come. As more Americans change their behavior assuming inflation will get worse, those actions can drive inflation up, leading to a cycle that’s difficult to break. Indeed, some 52 percent of Americans in the poll said they bought products before the prices went up.
“People’s expectations of inflation are rising,” said John Taylor, an economist at Stanford University and a former Treasury Department official in the George W. Bush administration. “The concern I have is that if people are saying, ‘Inflation is picking up, let’s buy now,’ that increases inflation even more.”
Inflation-driven lifestyle changes are more common among Americans who say rising prices are a “major financial stress” for their household. Nearly 8 in 10 people in that group say they’re saving less, and more than 4 in 10 say they have taken on additional work.
The poll finds that 57 percent of Americans say they have just enough money to maintain their standard of living while 20 percent say they are falling behind financially and 23 percent say they are getting ahead. Still, two-thirds say they are optimistic about their family’s financial situation.
“We’ve all noticed prices going up in the past year,” said Antonio Doblas-Madrid, an economics professor at Michigan State University. “People are looking at that and expecting it to continue, which can be a worrisome sign.”
More than a third of Americans say recent price increases have been a major financial stress on their households, with concerns peaking among lower-income households: A 54 percent majority of people with household incomes below $50,000 say rising prices are a “major financial stress,” compared with 31 percent of those with incomes between $50,000 and $100,000 and 17 percent of those with incomes of $100,000 or more.
Adults under age 50 and women were also more likely to report higher financial stress as a result of inflation than older adults and men.
“Inflation is a regressive tax: It is very costly for the poor,” Doblas-Madrid said, adding that one of the most determining factors is often whether someone owns or rents their homes. “If you’re renting, rents go up when inflation goes up, but if you’re a homeowner, your real estate starts appreciating.”
Housing — which takes up the biggest chunk of most household budgets — has been a particular source of strain for many families. Home prices have risen 21 percent in the past year, according to the S&P CoreLogic Case-Shiller index, while asking rents are up 15 percent nationwide, Redfin data shows.
About 1 in 4 Americans in the Post-Schar School poll say it would be easy to afford to rent a home in their current neighborhood if they had to move. But a 74 percent majority say it would be either “somewhat difficult” or “very difficult” to relocate in their neighborhoods.
Meanwhile, nearly half of renters report major financial stress from inflation, compared with 30 percent of homeowners.
Tosha Jankosky pays $1,356 a month for a two-bedroom apartment she shares with her teenage sons in Noblesville, Ind. The 41-year-old office manager makes $23 an hour — the best wages of her career — but says she still feels like she is financially losing ground.
She recently dropped her cable subscription, is cutting back on groceries and has put off buying furniture such as bed frames and a sofa. Still, she says, it’s becoming increasingly difficult to afford basic expenses.
“I should be able to live on my own,” she said. But “I’m getting ready to pay rent and it’s going to take every single dime I’ve made.”
Gas prices — which are at record highs near $5 a gallon — are another source of stress. Most drivers — 64 percent of them — are making fewer trips for groceries to save gas, the poll finds, while 34 percent report driving slower and a little more than 2 in 10 have carpooled or worked from home because of gas prices.
Meanwhile, more than 4 in 10 drivers say they have only partially filled their car’s gas tank, a figure that rises to 61 percent of drivers with incomes below $50,000, according to the poll.
Americans blame multiple factors for rising gas prices: 72 percent blame corporations trying to increase profits and 69 percent blame Russia’s actions against Ukraine, while 58 percent apiece blame President Biden and pandemic disruptions.
Back in Kentucky, Davis says gas has become such a burden that she and her boyfriend recently filled up a few extra plastic jugs with fuel when gas prices temporarily dipped below $4.50 a gallon. She and her boyfriend both work at Dollar General and bring home a combined $300 a week, $80 of which goes toward gas for their old pickup truck.
High gas prices, she said, are not only cutting into her budget but are also limiting employment options in her small town. The best-paying jobs are at factories on the outskirts of town, about 50 miles away.
Davis’s boyfriend recently quit his $10-an-hour job at a cookie factory after the 80-minute daily commute became untenable. His Dollar General job is closer to home but pays just $9.25 an hour.
“When you live in the middle of nowhere and gas prices keep going up, it affects everything,” Davis said. “The struggle just keeps getting harder.”
Beyond altered driving habits, economists say rising prices — and changing consumer behavior — are likely to have larger ripple effects on major life decisions, such as where to live and whether to marry or have children.
Nearly every day, Jayden Collins and his wife talk about starting a family, then check their savings account to see if they can afford it.
Inflation is a persistent obstacle, said Collins, a nursing student in Logan, Utah. Monthly rent and utilities have spiked about 50 percent since last year to $1,100. He makes $17 an hour working at a storage facility during the school year, but both he and his wife are looking for weekend jobs to make ends meet.
“Right after we got married, I was like, ‘Let’s go out. It’s like a date night every night,’ ” the 22-year-old said. “Now we’re like, ‘Man, this has turned out to be way more expensive than I thought it would be.’ ”
That leads to nearly nightly discussions about their financial future, he said. Family members and friends around them are pregnant or have young children, which makes him wonder how much longer he and his wife will have to wait before they have children of their own.
“We really want to get there,” he said. “My wife says, ‘So how can we improve our spending?’ That’s one of the major things we talk about. At least once a week, we say, ‘What did we spend money on that we could not have spent money on?’ ”
The Post-Schar poll was conducted April 21 to May 12 among a random national sample of 1,055 adults, who completed an online or paper questionnaire. The margin of error is plus or minus four percentage points overall and among the sample of 978 car drivers.