CUNA Mutual study finds consumer sentiment on the decline
The American middle class is less optimistic about their economic vitality, with many expressing concern of a looming recession, according to CUNA Mutual Group.
CUNA Mutual first asked about the outlook for middle class Americans in a survey during the fall of 2018. Respondents gave a “B minus” grade when asked about their progress in achieving the American Dream. But that grade dropped to a “C” when the group was re-surveyed in an increasingly unstable economic atmosphere, according to a press release on Tuesday.
“The middle class is mired in uncertainty,” Steve Rick, chief economist at CUNA Mutual Group, said in a press release. “This should be a wake-up call to families to start shoring up their finances now, whether that takes the form of cutting spending, reassessing their savings to avoid having to cut into their retirement to stay afloat, or even refinancing a mortgage if that’ll put them in a better position.”
Rick attributes some of these concerns to current conditions in the economy, including stagnating job growth, limited wage growth and increasing market volatility attributable to headwinds from tariffs and unfinished trade negotiations.
The study's sample size was 1,288 U.S. adults with an annual income between $35,000 to $100,000. The survey was completed in May.
Nearly 50% of respondents are concerned that the U.S. will enter a recession within the next year. And with the recent inversion of the yield curve, an indicator that’s signaled recessions in the past, these concerns may have significant weight.
A majority of respondents remain comfortable with their personal economic state, with 61% reporting that they are somewhat to very confident. Almost 90% believed there would be somewhat or very secure job growth within the next year.
Still, the CUNA Mutual report finds that the middle class could improve their economic outlook given that two-thirds reported a "somewhat" confident sentiment with respect to their personal economic position.
If a recession were to transpire within the next year, 53% would decrease discretionary spending and 52% would make a lifestyle change according to the survey’s results.
Women were found to be less bullish on their personal economic situation, with 54% saying they felt somewhat or very confident compared with 68% of men reporting the same sentiment. The survey also found parents to be more bearish versus their child-free counterparts.
Despite these uncertainties, the future isn’t bleak, Rick advised, since the middle class consistently makes up the backbone of the American economy.
“The key is using your current stability to plan for the future,” Rick said in the release. “Think of it as piloting a plane. You don’t wait until you’re flying through a storm to act; you plan, train and assess your flight path long before you ever leave the ground. Proactivity mitigates risk.”