Main Culprit: Inflation or COVID-19? 💰
Americans say inflation has had a bigger impact on their finances than COVID-19, although the pandemic has exacerbated inflation. Three-fourths of Americans (73%) say inflation has impacted their plans to buy a home, compared to just 23% who cited COVID-19.
Is Homeownership Still Attainable? | Overall Sentiment | Inflation and COVID-19 Financial Survival Tactics | Stimulus Checks | What’s Causing Inflation? | Outlooks on Inflation and the Pandemic | FAQs
Inflation has been the talk of the town for over a year now, with the current rate hovering at 6.5%. It’s driving up the cost of living for average Americans in ways that really stress our pocketbooks.
For example, eggs, a commodity typically considered inflation-proof because of subsidies, are even taking a hit these days. With egg prices increasing by 60% in 2022, you can imagine the cost of enjoying breakfast in the U.S. has also increased by that much.
Alongside increased costs on … everything, Americans are still having to adjust to living through a now three-year-long pandemic. According to our research, 54% of Americans consider the pandemic ongoing. The remaining 46% argue that the COVID-19 pandemic is over because, in large part, our daily lives are back to “normal.” The U.S., however, is still averaging around 40,000 new cases of COVID-19 a day.
With each new case of COVID-19, there’s one additional American who is potentially missing out on work or school, which can have long-term financial consequences.
Three-fourths of Americans (74%) believe we’re experiencing a recession. At the same time, 1 in 20 (6%) say they’ll never be able to pay off their current debts. If over half the country thinks we’re also in a pandemic, one could argue that we are an extremely stressed-out nation.
How are Americans balancing rising expenses and the constant concern over another pandemic? To answer that question, we surveyed 1,000 Americans to learn more about their finances, their debt, their emergency savings, and if they’ve recovered from financial setbacks as a result of the pandemic.
We also learned more about how the pandemic affected Americans’ ability to pay for housing and if it changed their home-buying or selling plans. Nearly half of Americans (49%) don’t believe they can afford a home at all.
Have Americans’ finances returned to normal in 2023? Or are they still impacted by the pandemic? Has recent inflation impacted their financial situation even more than the pandemic? Read on to find out.
📈 COVID-19 FINANCIAL INSIGHTS
- 70% of Americans say recent levels of inflation has impacted their finances more than the COVID-19 pandemic. Learn more.👇
- Renters (32%) are 10% more likely than homeowners (29%) to say they are financially worse off than before the pandemic . 👇
- 16% of Americans believe their finances will never recover from the pandemic. 👇
- Americans are 60% more pessimistic about the housing market than they were a year ago. 👇
- Only 28% say now is a good time to buy a home, compared to 44% in March 2022 and 69% in April 2021. 👇
- Only one-third of Americans (33%) believe they can pay off their debt within a year, and 6% believe they will never be able to pay off their debt. 👇
- Three years later, 72% of Americans still have not recovered financially from the COVID-19 pandemic. 👇
- 75% of Americans have non-mortgage debt, and of those, 73% are stressed about their current financial situation. 👇
- 73% of Americans have lived paycheck to paycheck at some point during the pandemic, including 44% who are currently living paycheck to paycheck. 👇
- More than 1 in 4 Americans (27%) have skipped meals, and 22% skipped medical appointments or treatments to save money.👇
- 82% of Americans support the government distributing more stimulus checks. 👇
- Nearly half of Americans (49%) consider the COVID-19 pandemic a leading cause of the historic inflation we’re experiencing. 👇
- 45% of Americans have no emergency savings at all, and 38% believe they will run out of savings in 2023. 👇
- Although 24% of Americans say they’re more stressed about pandemic-related issues than they were last year, 45% say they are less stressed. 👇
70% of Americans Say Inflation Has Impacted Their Finances More Than the COVID-19 Pandemic
Seventy percent of Americans say inflation this past year impacted their finances more than the COVID-19 pandemic did at its peak. In fact, Americans see inflation as more impactful than COVID-19 in a variety of areas.
About two-thirds of Americans (68%) report that inflation has impacted the U.S. economy as a whole more than COVID-19. Another 70% think it’s more impactful on the stock market than COVID-19.
When it comes to the job market and the supply chain, Americans view inflation and COVID-19 as equally impactful. Americans were split evenly at 50% for inflation and 50% for COVID-19.
69% of Renters Don’t Think They Can Afford a Home in 2023
Renters (32%) are 10% more likely than homeowners (29%) to say they are financially worse off than before the pandemic. Furthermore, 69% of renters don’t think they can afford a home in 2023.
Renting has historically been seen as an affordable transition into homeowning. While renting, Americans are expected to save money for a home. But with monthly rent prices also increasing because of inflation and a competitive housing market, that’s becoming more difficult to do.
The circumstances of 2023, in particular, are stopping people from achieving the American Dream. Although 69% of Americans don’t think they could afford to buy a home this year, only 49% don’t think they can afford a home in general. This suggests that many renters hope the years to come will bring a more affordable housing market.
Other factors hindering home buying for renters are not having a substantial down payment saved (42%) and not being able to qualify for a mortgage (29%).
One-fourth of respondents desire to remain a renter (25%). Remaining a renter during a period of high inflation can be a sound financial decision. Although monthly mortgage payments tend to be lower than monthly rent prices, homeowners are usually on the hook for repairs or maintenance, whereas renters are not.
Overall, Americans are feeling fairly pessimistic. If 69% of renters don’t think they can afford a home in 2023, that’s 69% of potential home buyers choosing to stay put.
Nearly 1 in 6 Americans (18%) believe it will take three years or more for their finances to recover from the COVID-19 pandemic, and 16% don’t think their finances will ever recover. This could have long-term impacts on the housing market.
60% Of Americans Are More Pessimistic About the Housing Market Than They Were a Year Ago
Three years into the pandemic, Americans are 60% more pessimistic about the housing market than they were a year ago. Only 28% say now is a good time to buy a home, compared to 44% in March 2022 and 69% in April 2021. For many, the economic outlook is grim.
Americans are likely so pessimistic about the future because inflation impacts all aspects of their finances. About three-fourths of Americans (72%) think inflation had a bigger impact on the housing market than COVID-19.
COVID-19 not only disrupted the supply chains and staffing abilities of construction companies, but it also drove up home prices and mortgage rates.
Inflation, however, drove interest rates up, which made it significantly harder to buy a home. Nearly 3 in 4 Americans (73%) cited inflation or high interest rates as the main reason they don’t plan to buy a home in 2023.
Only 23% attributed the pandemic as a determining factor in their plans to buy a home this year.
15% of Homeowners Delayed Plans to Sell Their Home Indefinitely Due to COVID
The pandemic definitely made an impact on homeowners. About 15% of homeowners delayed plans to sell their homes indefinitely due to COVID-19. Although many Americans feel that COVID is over, a significant portion is remaining cautious and taking more time to envision their long-term plans.
A stark 55% shared that they never had plans to sell their home during the pandemic. In years to come, it will be important to observe if homeowners decide to stay put, given the current economic uncertainty. Between inflation and an unstable pandemic, homeowners may opt for the safe bet of remaining in their current homes.
Another 15% of homeowners say inflation has caused them to delay selling their home indefinitely, whereas 5% say it caused them to sell sooner than they had planned. Selling during peak inflation could provide homeowners with more bang for their buck.
Eleven percent of homeowners say they’re still planning to sell their home this year, regardless of inflation. Nine percent even say inflation is causing them to accelerate their plans. This tracks with our findings that 22% of Americans are moving to seek a lower cost of living overall. For many, this requires selling their old home and moving to a more affordable area.
Overall, compared to COVID-19, inflation seems to take slightly more of the blame when it comes to impacting the housing market.
One-Third of Homeowners Have Missed or Deferred a Mortgage Payment
Another reason some homeowners are trudging along with selling their homes is that they just don’t have much of a choice. American homeowners can barely make ends meet. One-third of homeowners (33%) have missed or deferred a mortgage payment. That number is up four percentage points compared to last year, when only 29% of homeowners reported the same.
Homeowners are no better off than renters: 33% of renters reported missing rent payments last year. On average, homeowners have missed three payments in the last year. With missed mortgage payments becoming more common, Americans must ask themselves if homeownership is actually more financially sound than renting.
73% of Indebted Americans Are Stressed About Their Financial Situation
The number of Americans who feel like they haven’t recovered from the impact COVID-19 had on their finances is on par with the number of those who are stressed about their finances. Nearly 3 in 4 Americans in debt (73%) are stressed about money. Ongoing stress can have severe health consequences, something Americans don’t need while still at risk of contracting COVID-19.
Their stress is also manifesting in emotional strain. More than half of Americans (55%) have cried over their finances in the past year, and 51% have also fought with loved ones in the past year. American culture promotes perseverance, but it appears that most of the country is struggling to navigate the current economy.
1 in 20 Americans Believe They Will Never Pay Off Their Debt
Three-fourths of Americans (75%) have non-mortgage debt, and of those, only one-third (33%) believe they can pay off their debt within a year. Additionally, 6% of Americans don’t think they will ever be able to pay off their debt.
Only a third of Americans (33%) believe they can pay off their debts in a year or less. Another quarter (24%) think it will take two to four years to do so. About 1 in 7 Americans (15%) also believe their debts will take five years or more to pay off, and 6% don’t think they ever will.
If stress compounds the longer it’s experienced, the country’s overall stress levels will continue to grow. Health experts are already observing that rates of depression have significantly increased since the pandemic began. Can Americans afford to add mental health care to their budgets right now?
44% of Americans Are Still Living Paycheck To Paycheck
Three-fourths of Americans (73%) have lived paycheck to paycheck at some point during the pandemic, including 44% who are currently living paycheck to paycheck. That percentage is slightly down from last year when 48% reported that they were currently living paycheck to paycheck.
Although fewer Americans are living paycheck to paycheck, they’re making serious concessions to do so. Namely, Americans are working more and spending less. This is especially true since federal unemployment benefits have ceased for many Americans who were previously receiving them because of the pandemic.
Unfortunately, many Americans are making serious, potentially life-threatening decisions to make ends meet. More than 1 in 4 (27%) say they’ve skipped meals, and 22% skipped medical appointments or treatments to save money.
Americans are also sacrificing leisure time, with nearly a third (30%) taking on a side gig for additional income. Another 30% dipped into their emergency savings to make ends meet.
45% of Americans Have No Emergency Savings
Many Americans are dipping into emergency funds to cover living expenses, but 45% of Americans have no emergency savings. A sobering 29% never had emergency savings in the first place.
Prospects aren’t looking good even for those who still have some emergency savings: 38% believe they will run out of savings in 2023.
It’s recommended that adults have three to six months’ worth of expenses saved at any given time. However, most Americans (65%) would be out of luck if they had an expensive emergency. Nearly 2 in 3 Americans (65%) say they couldn’t afford an unexpected bill of $1,000. Situations such as these likely contribute to the high-stress levels Americans are reporting.
82% of Americans Support Government Distributing More Stimulus Checks
Stimulus checks are a controversial topic. Although 82% of Americans support the government distributing more stimulus checks, a sizable 18% do not. It also appears that Americans weren’t particularly thrilled that the amount of money for both rounds of stimulus checks was the same across income classes.
Three-fourths of Americans (74%) say the government should distribute stimulus checks scaled by income level. This means that nearly 3 in 4 respondents support Americans with lower incomes receiving bigger stimulus checks than those who are rich or wealthy.
Overall, Americans recognize the need for an overall lower cost of living in the country. Three-fourths of Americans (74%) named a lower cost of living as the solution that would help them the most financially.
Stimulus checks, in particular, are a top financial relief program Americans desire, with 59% saying it would provide financial relief for them.
Despite increased attempts for the government to forgive federal student loan debt, only 18% of Americans listed loan relief as a top choice. This may be because federal student loan payments remain paused for many as a relief program that began due to the pandemic.
Nearly Half of Americans Consider the Pandemic a Leading Cause of Historic Inflation
Pandemic relief programs aside, Americans still ultimately blame it for our poor economy. Nearly half of Americans (49%) consider the COVID-19 pandemic a leading cause of today’s high inflation rate.
Although Americans say inflation has impacted their finances worse than COVID-19, they see COVID-19 as a key contributor to inflation. Experts attribute several other factors to record inflation, such as China’s economic issues and the armed conflict in Ukraine.
Another factor contributing to inflation is simply that companies are charging more for goods. Several industries reported record-level profits in 2022.
Where the blame lies can also be attributed to how various entities reacted to the pandemic leading up to historic inflation. When asked about how various groups reacted to the pandemic, foreign governments were said to have underreacted (25%) slightly more than the U.S. government (23%).
However, Americans said media organizations overreacted to the COVID-19 pandemic (49%) more than any other group.
Despite much debate about its suggested protocols, 55% of Americans believe the Centers for Disease Control (CDC) reacted adequately to the pandemic. It seems that Americans think the COVID-19 pandemic will have more of a long-term economic impact on their lives rather than a long-term impact on their health.
Most Americans Are Less Stressed About COVID Than They Were Last Year
Although 24% of Americans say they’re more stressed about pandemic-related issues, many more are less stressed about COVID-19 than they were last year (45%). As years pass, this stress should continue to decrease, even amid new variants and increased cases each holiday season as more people gather.
Despite the pandemic becoming less of a source of stress, Americans are split on whether our economy will recover to pre-pandemic levels. Only 37% of Americans think the economy will return to its pre-pandemic health in 2023. Additionally, 30% actually believe the economy will get worse in 2023 — possibly because of new variants and other diseases.
More than half 53% of Americans (53%) are worried about future COVID variants emerging and the threat to economic improvement they may pose.
A whopping 81% of Americans are concerned about the current tripledemic. The tripledemic is the co-occurrence of COVID-19, seasonal flu, and respiratory syncytial virus (RSV) that has put a strain on medical resources nationwide. It’s reported that 40% of U.S. households were impacted by the tripledemic during the holiday season.
The winter season is usually when illnesses such as the tripledemic peak. With winters becoming more brutal for many regions, concerns about missed work and school for already cash-strapped Americans are ever-looming.
Although 58% of Americans believe the worst of the COVID-19 pandemic is over, the past three years have shown us that American households must always be prepared for new challenges. Whether those challenges are spikes in the cost of living, natural disasters, or undisclosed viruses rocking communities, they must strategize ways to overcome financial turmoil and an economy they cannot yet control.
The proprietary data featured in this study comes from an online survey commissioned by Real Estate Witch. One thousand people were surveyed on Jan. 26, 2023. Each respondent answered up to 21 questions related to their personal finances and how they were impacted by COVID-19 and inflation.
About Real Estate Witch
You shouldn’t need a crystal ball or magical powers to understand real estate. Since 2016, Real Estate Witch has demystified real estate through in-depth guides, honest company reviews, and data-driven research. In 2020, Real Estate Witch was acquired by Clever Real Estate, a free agent-matching service that has helped consumers save more than $82 million on realtor fees. Real Estate Witch’s research has been featured in CNBC, Yahoo! Finance, Chicago Tribune, Black Enterprise, and more.
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How has COVID affected inflation?
COVID-19 has caused supply chain disruptions and changing consumer spending patterns, leading to a temporary rise in prices for certain goods and services. Although the pandemic isn’t the sole cause of inflation, nearly half of Americans (49%) think it contributed more than any other factor. Find out more.
How do you handle personal finances during inflation?
During inflation, focus on balancing your budget. Reduce debt and increase emergency savings, seek stable (or more stable) sources of income, and consider getting into some sort of investment. About 30% of Americans have taken on additional jobs to improve their personal finances amid inflation and the pandemic.
What percent of Americans live paycheck to paycheck?
According to our research, 73% of Americans have lived paycheck to paycheck since the pandemic began in March 2020. Find out more about how the COVID-19 pandemic and inflation have impacted Americans’ finances.