WASHINGTON, D.C. — Reflecting on their personal financial situations, 35% of Americans say they are better off now than they were a year ago, while 50% are worse off. Since Gallup first asked this question in 1976, it has been rare for half or more of Americans to say they are worse off. The only other times this occurred was during the Great Recession era in 2008 and 2009.
On the other hand, today’s “better off” percentage is not unusually low, having descended to 35% or lower during other challenging economic times. This includes the late 1970s and early 1980s, the early 1990s, and from 2008 through 2012. In those periods, a higher percentage than today’s 14% volunteered that their finances were “the same” as last year.
The latest results are based on a Jan. 2-22 Gallup poll. They follow a year of persistent high inflation, with the highest inflation rates since 1982. Stock market values declined and interest rates rose in 2022, but, on average, personal wages increased substantially.
In both 2021 and 2022, Americans were evenly divided between saying they were better off versus worse off, including a 41% to 41% split in last year’s survey.
By contrast, before the pandemic in January 2020, Americans were almost three times as likely to say they were better off (59%) as worse off (20%). The 59% reading is one of the highest in Gallup’s trends, along with a 58% reading in 1999.
Lower-Income Americans More Likely to Say They Are Losing Ground
Most lower-income Americans, 61%, say their financial situation has deteriorated over the past year, while less than half that number, 26%, indicates it has improved. Middle- and upper-income Americans are also more likely to say they are worse off than better off, but by much narrower margins than seen among the lower-income group.
Many more lower-income Americans this year say they are worse off than said so last year (41%). Upper-income Americans are also more likely to say they are worse off now (by 10 percentage points), while middle-income Americans’ results are similar to last year’s survey.
There is also a political element to how people evaluate their personal finances, as significantly more Republicans (61%) than Democrats (37%) say they are worse off. In fact, more Democrats (47%) say they are better off than worse off.
Democrats generally rate their finances better than Republicans do when a Democratic president is in office, and the reverse is usually true under Republican presidential administrations.
Americans Remain Optimistic About Their Finances Over the Coming Year
High inflation and other challenging economic factors have not dampened Americans’ expectations about their financial situation in the year ahead. Sixty percent expect to be better off a year from now, while 28% predict they will be worse off. This is the case even though Americans are largely pessimistic about national macroeconomic conditions in the coming months.
Americans have tended toward optimism when projecting their future financial situations in all Gallup readings since 1977, with more expecting their finances to get better rather than get worse.
While still positive, the current reading is less upbeat than Gallup measured between 2015 and 2020, including a record-high 74% “better off” reading in January 2020. Americans’ personal financial expectations are unchanged from last year.
Americans from different economic backgrounds are equally optimistic about their personal finances in the coming year — 62% of lower-income Americans, 60% of middle-income Americans, and 59% of upper-income Americans expect to be better off a year from now.
To the extent financial expectations differ, it is because of politics. Whereas 70% of Democrats and 60% of independents believe their situation will be improved at this time next year, only 49% of Republicans agree.
Bottom Line
High inflation, rising interest rates, and declining stock values in 2022 all likely took their toll on Americans’ financial situations, with half saying their situation got worse in the past year. Lower-income Americans, who have consistently been most likely to report that higher prices are causing them financial hardship, are particularly inclined to say they are financially worse off.
Still, Americans remain optimistic about the year ahead for their financial situations, which they typically are, almost regardless of recent economic conditions. If this optimism holds and consumers act accordingly, it may help to minimize or avert an economic recession.