The U.S. labor market has dramatically improved since the coronavirus outbreak first swept the nation more than a year and a half ago, but a new Bankrate poll finds that Americans are still worried about its lingering effect on the economy — and their wallets.
Nearly 2 in 5 Americans (or 39 percent) cited the pandemic as the dominant threat to the economy over the next six months. That fear trumped the political environment in Washington (21 percent) by almost two-fold. Worries about inflation (14 percent) came in a distant third. Illustrating the concern, more than 3 in 5 Americans (or 63 percent) are worried that those threats could negatively affect their jobs or incomes over the same time frame, the poll found.
Vaccinations and loosening restrictions have helped U.S. economic growth bounce back to pre-pandemic levels, while some economists say the financial system is on its way toward the fastest annual growth rate since 1984. Yet, headwinds could still knock the financial system off course, from the rapidly spreading Delta variant to slowing vaccination rates and outbreaks abroad.
“Americans continue to see the coronavirus pandemic as the biggest economic threat of the next six months, and 63 percent of Americans are concerned about their jobs and incomes taking a hit,” says Greg McBride, CFA, Bankrate chief financial analyst. “Nervous households are less likely to spend, and recent pullbacks in travel and consumer discretionary purchases bear this out.”
- Americans say the three biggest threats to the U.S. economy are the coronavirus pandemic (39 percent), political environment in Washington (21 percent) and inflation (14 percent).
- Nearly a quarter (23 percent) of Americans are very concerned that these threats could impact their income or job prospects, while 40 percent are somewhat concerned.
- Americans are optimistic about the direction of the U.S. economy six months from now, with more than half (56 percent) expecting the financial system to be either somewhat better (48 percent) or much better (9 percent).
Economy’s biggest threats: Pandemic, politics and price increases
Americans saw the pandemic (39 percent), politics (21 percent) and inflation (14 percent) as the top three threats facing the U.S. economy, though other concerns made the list, including:
- Political or economic developments overseas, at 9 percent;
- Terrorism, at 8 percent;
- An unexpected rise in interest rates, at 4 percent;
- A decline in the stock market, at 3 percent; and
- “Something else,” at 1 percent.
Meanwhile, less than 1 percent of respondents foresaw no immediate threat to the economy over the next six months. Less than half a percent said, “Don’t know.”
Americans pointed to the pandemic over politics as the biggest threat to the economy for the second straight survey, and the margin between the two issues has grown notably post-election. When Bankrate polled respondents in October 2020, less than a month before the 2020 presidential elections, 44 percent saw the coronavirus as the biggest economic threat, versus 34 percent who pointed to the presidential elections.
Before COVID-19, the political environment in Washington was a runway top choice as the biggest economic threat in previous polls, with 38 percent citing it in April 2017, 36 percent in September 2017, 43 percent in November 2018 and 44 percent in April 2019.
Americans’ see different threats based on their age and political affiliation
Still, Americans’ ideas about the biggest threats depended on how old they were and whether they identified as a Republican, Democrat or independent.
Baby boomers (those between the ages of 57 and 75) and Republicans were more likely to cite Washington politics as the biggest threat to the economy over the next six months, both at 32 percent, respectively.
At the same time, nearly half of millennials (those between the ages of 25 and 40) were most likely to point to the pandemic as the biggest economic threat in the next six months, at 48 percent, followed by Gen Xers (those between 41 and 56) at 41 percent. The pandemic was also the predominant concern among every income group, level of educational attainment and region of the country, the poll found.
Even more surprising, however, lower-income groups who tend to fare the worst in higher inflationary environments didn’t indicate major concerns about rising prices. About 14 percent of Americans who earned under $30,000 a year indicated that it was their top concern for the U.S. economy in the next half-year. For those who earned between $30,000 and $49,999 a year, inflationary concerns were tied with political concerns, both at 19 percent. Twice as many White and Hispanic Americans (at 14 percent and 19 percent, respectively) were concerned about inflation than Black respondents, at 7 percent.
That comes as Americans are identifying that price increases have impacted their wallet. An August Bankrate report found that 89 percent of adults have noticed rising prices, with 66 percent of those participants indicating that their finances have taken a hit from it.
“While inflation is on everyone’s radar, it is far from the biggest risk,” McBride says. “Just 1-in-7 Americans see inflation as the biggest economic threat in the next six months, and even among households earning less than $50,000 per year, just 1-in-6 see it as the biggest risk.”
Americans are concerned these threats could hurt their income and job prospects
Regardless of the concern, Americans are overwhelmingly worried that one of these economic threats could harm their finances, with:
- 23 percent of Americans indicating they’re very concerned about their job or income source over the next six months; and
- 40 percent noting they’re somewhat concerned.
Those who expressed concern outnumbered the Americans who indicated they weren’t concerned by nearly a 2-to-1 margin (63 percent versus 36 percent, respectively). That total included:
- 18 percent who said they were not too concerned; and
- 18 percent who indicated they were not at all concerned.
Meanwhile, less than 1 percent of respondents either refused or selected, “don’t know.”
Americans continue to see the coronavirus pandemic as the biggest economic threat of the next six months, and 63 percent of Americans are concerned about their jobs and incomes taking a hit. Nervous households are less likely to spend, and recent pullbacks in travel and consumer discretionary purchases bear this out.
— Greg McBride, CFA, Bankrate chief financial analyst
Most Americans across every income group, educational level, demographic, political affiliation and residency indicated that they were concerned about their future finances, though some expressed a greater degree of worry than others.
Black and Hispanic respondents, for example, were nearly two times as likely as White respondents to express that they were very concerned with their job and income prospects over the next six months, at 35 percent and 36 percent versus 18 percent, respectively. At the same time, older millennials and Gen Xers tended to be the most worried about their income situation, with 71 percent and 72 percent of that age group indicating some level of concern.
Americans are optimistic about the U.S. economy six months from now
Even though Americans are concerned about their money, most are broadly expecting the economic recovery to continue, with 56 percent expecting that the economy will be in better shape about six months from now.
Nearly half (or 48 percent) of Americans say the economy will be somewhat better over that time frame, while another 9 percent expect the economy to be much better off. At the same time, 28 percent predict the economy will be somewhat worse than it is today, while 15 percent say it will be much worse. About 1 percent selected, “don’t know.”
While Gen Xers and older millennials had the highest level of concern for their jobs or incomes, they were also the most optimistic that the economy would get better over the next six months, at 59 percent and 68 percent, respectively.
Those who make less than $30,000 a year were evenly split on whether the economy will be better or worse six months from now, both at 49 percent, while most Republican-identifying respondents and those age 65 and up indicated that the economy would get worse (55 percent and 51 percent, respectively).
When it comes to politics, 68 percent of Democrats expect the economy to be in a better place six months from now, as opposed to just 44 percent of Republicans. Most independents (56 percent) expected an improved economy in Bankrate’s poll.
Optimism for the U.S. economy grew as household income increased. Among the highest income households (those who earn more than $75,000 annually), 65 percent expected the economy to get better, compared with 59 percent for households earning $50,000-$74,999 and 52 percent earning $30,000-$49,999.
What this means for you
If the economy is keeping you up at night, consider pulling back on unnecessary spending and funnel as much cash to your emergency fund as possible.
Experts typically recommend building a fund worth six months’ of your expenses. That way, if you encounter an unexpected emergency or cutback in your income, you’ll be able to foot the bill for a substantial period of unemployment. Jobless Americans face a total duration of about 30 weeks of unemployment on average, or 7.5 months, according to the Department of Labor.
Homeowners may still be able to free up cash by refinancing their mortgage, with many still likely to have that opportunity. An August Bankrate survey found that 74 percent of homeowners haven’t refinanced their mortgage despite historically low mortgage rates. Doing so could potentially trim hundreds of dollars off of your monthly payment, and it might be another key way to safeguard your wallet against growing prices.
“The debate over whether inflation will be short-lived or more sustained has not been resolved,” McBride says. “The jury will remain out for many more months, particularly with persistent supply chain constraints.”
This study was conducted for Bankrate via telephone by SSRS on its Omnibus survey platform. The SSRS Omnibus is a national, weekly, dual-frame bilingual telephone survey. Interviews were conducted from August 24-29, 2021, among a sample of 1,009 respondents in English (974) and Spanish (35). Telephone interviews were conducted by landline (201) and cell phone (808, including 558 without a landline phone). The margin of error for total respondents is +/- 3.76 percent at the 95 percent confidence level. All SSRS Omnibus data are weighted to represent the target population.