The Federal Reserve Bank's decision to maintain steady interest rates has sparked a surge in inflation concerns, with Generation X feeling the brunt of the impact.
A recent consumer pulse study by TransUnion, conducted in collaboration with third-party research firm Dynata, reveals that 64% of Gen Xers have reduced discretionary spending on activities such as dining out and travel in the past three months. This figure represents the highest percentage across all generations, as reported by The Business Insider.
TransUnion's study, published on June 12, surveyed 3,000 adults between April 29 and May 8. The findings show that 84% of respondents identified inflation on everyday items like groceries and gas as a primary worry, marking a 5% increase from the same period last year. Concerns about interest rates also rose to 46%, up from 41% the previous year.
The escalating apprehension over inflation has led many Americans to the conclusion that their earnings are not keeping pace with the cost of living. Generation X, those born between 1965 and 1980, is grappling with this issue the most. A staggering 56% of this demographic reported that their income is not matching the rate of rising prices, the highest percentage among all generations.
This revelation comes at a time when many Gen Xers are already under significant financial strain. According to a survey conducted by Business Insider and YouGov in July, which polled over 1,800 US adults, half of the Gen X respondents do not feel financially secure, despite being at the peak of their earning potential. This generation was also the least likely to feel somewhat or very financially secure.
Further compounding the financial woes of Gen X is the fact that they account for 38% of the US debt, despite making up only about 20% of the US population. This data comes from the Federal Reserve's Survey of Consumer Finances. Moreover, Gen X holds a more pessimistic view of the economy at large.
While all generations cited inflation as their primary concern regarding household finances, with percentages ranging from 77% for Gen Z to 90% for baby boomers, a significant number of Gen Xers are also apprehensive about a potential recession. Half of this group identified this as their second-largest concern.
Furthermore, only 47% of Gen Xers expressed optimism about their household finances over the next 12 months. This figure lags behind Gen Z and millennials, who reported optimism levels of 65% and 64% respectively. Baby boomers were more evenly divided, with 49% expressing optimism.
In response to the rising inflation, more than a third of Gen X respondents anticipate canceling subscriptions and memberships, and one in four plan to cancel or reduce digital services.
Charlie Wise, senior vice president and head of global research and consulting at TransUnion, commented on the situation in the company's press release. "Consumers are facing distinct challenges when taking into account today's high inflation and interest rate environment," Wise said. "As the cost of living continues to increase, we are seeing clear behavioral changes, with those being 'inflation concerned' more likely to cut back on discretionary spending and cancel subscriptions or memberships."
As inflation worries continue to mount, Gen X is feeling the pressure more than any other generation. They are grappling with high levels of debt and income growth that fails to keep pace with the rising cost of living. The question remains: how will this generation adapt to these economic challenges in the long run?
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