Americans are feeling modestly better about the state of the U.S. economy, but say that still-high inflation is continuing to pose a financial hardship, according to a new survey published by Gallup.
Findings released Tuesday show that Americans’ monthly ratings of national economic conditions rose in January to the highest level in two years, although it still remains in negative territory.
A majority of Americans — about 45% — rated the current economic climate as poor, while just one-quarter described the conditions as excellent (5%) or good (22%). Another 29% said the economic conditions are only fair. That is a slight improvement from December, when 22% of adults surveyed rated the economy as excellent or good.
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The increased optimism about the state of the economy and its trajectory mostly stems from Democrats, 54% of whom rated the economy as good or excellent in January. By comparison, just 8% of Republicans and 21% of independents rated the economy as excellent or good.
Despite the slight improvements in Americans’ views of the economy, an overwhelming majority have said that high inflation is continuing to squeeze them financially.
About 63% of U.S. adults said that recent price increases have caused financial hardship for their family, including 17% who said it is a severe hardship affecting their ability to maintain their current standard of living, according to data from the Jan. 2-Jan. 16 survey. Just 37% of Americans said that inflation is not a problem.
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While inflation has fallen considerably from a peak of 9.1% notched during June 2022, it remains well above the Federal Reserve’s 2% goal. And when compared with January 2021, shortly before the inflation crisis began, prices are up a stunning 17.6%.
High inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. Food prices are up 33.7% from the start of 2021, while shelter costs are up 18.7%, according to FOX Business calculations. Energy prices, meanwhile, are up 32.8%.
The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily affected by price fluctuations. About 76% of lower-income households cited high prices as a hardship, compared to 65% of middle-income households and 54% of higher-income households, according to Gallup.
The typical U.S. household needed to pay $211 more a month in December to purchase the same goods and services it did one year ago because of still-high inflation, according to separate calculations from Moody’s Analytics. Americans are paying on average $1,020 more each month compared with the same time two years ago.
The latest findings from Gallup come amid ongoing pessimism among U.S. households about their financial situation under President Biden. A recent survey published by Bankrate shows that 50% of Americans say their financial situation has gotten worse since the 2020 presidential election. By comparison, just 21% think their financial situation has improved, while 26% believe it is unchanged.
“Views of the economy remain largely negative, particularly among Republicans and independents, which could spell trouble for Biden as he seeks reelection,” the Gallup survey said.
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