Consumer price inflation stands at 8.2%, and the Federal Reserve has raised interest rates 3 percentage points since March.
Workers are hurting.
It’s probably no great shock to you that their finances have deteriorated over the past year, given raging inflation and soaring interest rates.
To put some numbers on the trend, two-thirds of employees say they’re financially worse off than they were a year ago, according to a study by Salary Finance, which partners with employers to provide financial products and services.
Consumer prices jumped 8.2% for the 12 months through September. And the Federal Reserve has raised interest rates 3 percentage points since March, with more hikes almost certainly on the way in coming months.
Getting back to finances, nearly three-quarters (72%) of workers have less savings than they did a year ago. The figure is even higher for women — 81%. Even among women making more than $100,000, two-thirds have less savings.
A total of 29% of workers have completely drained their savings, including 40% of women. And 32% of employees say they almost always run out of money between paychecks.
Mental Health Suffers
A total of 54% of workers spend time worrying about their finances at least once a day, including 69% of Hispanic/Latino employees.
So it’s not surprising that 92% of workers say their finances are having a negative effect on their mental health, including 95% of women and 93% of Hispanic Latino employees.
And the worries are hurting productivity, with 59% of workers say they spend at least one hour a week at work fretting over their finances.
“Across the board, American workers are struggling financially, regardless of gender, race, ethnicity, sexual orientation, or earnings,” said Asesh Sarkar, chief executive of Salary Finance. “In fact, half of American workers making over $100,000 are worse off this year.”
Pressure on Spending
Meanwhile, an August survey from Jungle Scout, a platform for merchants to sell on Amazon, shows how inflation is affecting spending.
A total of 84% of consumers said inflation has affected their spending, up from 77% in the second quarter, according to the study.
And 76% said they’re making fewer fun/impulse purchases, up from 72% in the second quarter.
A total of 37% of consumers said their spending has decreased this quarter, 36% said it has stayed the same and 27% said it has increased.
The top categories in which consumers said they’re cutting back spending are:
1. Dining out at restaurants/bars
2. Leisure travel
3. In-person entertainment (movies, concerts, etc.)
4. Streaming entertainment subscriptions (Netflix, iTunes, Audible, etc.)
5. Subscription services (meal kits, food delivery, etc.)
6. Personal care services (hair/nail salons, spas, etc.)
7. Clothing/accessories
8. Groceries
9. Home improvement/decorating.
When it comes to holiday spending, 55% of consumers said inflation would affect those expenditures this year. A total of 54% anticipate spending less on gifts per person, and 47% foresee buying discounted products.
