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Feeling downbeat on the US economy

In the news

•

When salaries trail inflation. US inflation surged to a four-decade high in June 2022. Americans’ wages are increasing, but not at the rate of inflation. In November, inflation increased slightly to 7.1%, while US compensation growth is typically consistent with a 4.5% inflation rate. US employers are awarding pay raises and doling out other benefits, but they generally don’t focus on the cost of living when determining pay. Besides changing jobs to earn more, workers can also negotiate for perks such as free meals or more time off. [CNBC]

•

Grinch-like gift giving. A new Associated Press-NORC Center for Public Affairs Research poll finds that more than half of Americans believe it’s more difficult to afford the gifts they want to give this holiday season. The December 2022 poll of 1,124 adults found that 57% are having a harder time paying for gifts for friends and families, compared with 40% in 2021. A majority are scaling back holiday gift giving as a result. Retailers are offering deeper discounts to lure shoppers, and over the Thanksgiving holiday slashed prices an average of 31% across all online products. [Fortune]

Americans are increasingly drawing down savings and running up credit card debt. Twenty-four percent of respondents saw a decrease in their debt payments or savings.

On McKinsey.com

•

High prices, low expectations. The job market may still be strong, but Americans’ view on access to economic opportunity is increasingly pessimistic, according to an Ipsos poll conducted on behalf of McKinsey. McKinsey’s scoring of the responses on US economic outlook—scaled from 0 to 200, from low to high perception of economic opportunity—showed a 14-point drop from 99 to 85 in overall economic sentiment, compared with a survey from six months ago, explain McKinsey senior partners André Dua and Kweilin Ellingrud and their coauthors.

•

Pessimism in prime earning years. Unlike results from previous surveys, the lack of optimism cut across all income levels, genders, and ages, with the sharpest declines among those aged 25 to 34. With high inflation pinching household budgets, more Americans also think that the US is doing a poor job of providing economic opportunity for all people, according to our survey of over 2,000 adults. See more striking findings, including where Americans are spending and saving, from McKinsey’s American Opportunity Survey.

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— Edited by Belinda Yu, editor, Atlanta

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by "McKinsey On Point" <publishing@email.mckinsey.com> - 10:13 - 18 Dec 2022

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How is the US doing on providing economic opportunities? See our latest research.

Feeling downbeat on the US economy

In the news

Americans are increasingly drawing down savings and running up credit card debt. Twenty-four percent of respondents saw a decrease in their debt payments or savings.

On McKinsey.com