How Americans Reacted to the Inflation Crisis?
Over the last two years, high inflation has adversely affected the American economy. This inflation crisis is undermining the financial well-being of millions of citizens, especially of the fixed-income population.
Notably, basic necessities, like food, fuel, and housing, have become increasingly expensive, further burdening individuals.
The high inflation has pushed citizens toward fiscal prudence and resourcefulness. They changed their spending behaviors.
During this period of high inflation crisis, 64 percent of U.S. adults have cut back their spending on non-essential goods and services, according to a joint Statista Q and We Are Social survey in April 2023.
Similarly, bargain-hunting has become a popular strategy. An equal 64 percent c citizens are seeking deals. While only 11 percent have remained unchanged in their financial behavior
U.S. Inflation Outpaces Wage Growth
It is to be noted that in May 2023, after 25 months of declining real wages, nominal wage growth matched inflation, ending two years of effective pay cuts for American workers.
The upward move of inflation outpaced wage growth. This caused the citizens to earn less when accounting for the cost of living. Real hourly earnings have risen for five consecutive months, but wages remain nearly the same as they were in February 2020 before the pandemic, at $11.02 per hour in constant 1982-1984 dollars.
Throughout the crisis, the nominal wages continued to grow despite making more money. It led them to consume less as they were able to afford less than before. Now, for many Americans, the rising prices were at the top of the list of their concerns.
Everyday general price increase had eroded their purchasing power, leading to financial insecurity in their lives. Inflation is a formidable adversary, that has outpaced wage growth. It is eating away at their incomes and leaving them with less money to meet their other expenses.
Being a stark reality, the high inflation has left an enduring mark on the financial choices of the American people.
