Americans Making More Money but Say Rising Costs Have Changed Their Spending, Poll Finds

A new poll said that Americans are making more money than before the pandemic, but the higher prices of everyday items have caused people to adjust their spending habits.

According to the poll created by the Associated Press-NORC Center for Public Affairs Research, the increased prices across the economy have many Americans change how much they spend and what they spend it on as higher prices are seen everywhere.

One-third of Americans say they have changed how much they drive because gas prices increased nearly 50 percent since last year. Another 33 percent of people said they're buying less meat than they traditionally do because the prices have increased by 15 percent, according to the poll.

A quarter of Americans say they're currently earning more money compared to what they were making before the pandemic, an average of 4.2 percent. However, a quarter of Americans say their income has dropped and half reported it's remained the same.

At least 44 percent of people reported in recent months that higher prices for food had a substantial effect on their finances. Others have reported it has a minor effect. Regardless of the increased prices, a majority of people reported their finances are still OK, according to the poll.

The increase in people's incomes is the highest annual increase in two decades. However inflation rose to 6.7 percent in November, making it the highest rate in nearly four decades, the poll reported. The increase in salaries doesn't match the rise in inflation canceling the gain in income for many people.

Chevron Gas, California
According to the poll, one-third of Americans say they have changed how much they drive because gas prices increased nearly 50 percent since last year. Above, Chevron Gas prices over the $5 mark are displayed in Visalia, California, November 16. Rich Pedroncelli/AP Photo

Two-thirds say their household costs have risen since the pandemic. The poll confirmed that the burden has been especially hard on low-income households.

A likely factor in Americans' worries about inflation is that rising prices have been concentrated in highly visible categories: The poll finds that 85 percent say they paid higher-than-usual prices for food and gas in recent months. Nearly 6 in 10 say the same about electricity. About 4 in 10 say they bought appliances recently and that the prices were higher than normal.

The effect is even more pronounced among middle- and lower-income Americans: Half of people in households earning less than $50,000 a year say the price increases have had a major impact on their finances. Only a third of those in households earning more than $50,000 say the same.

On Friday, when the government will issue its latest reading on consumer prices, it's expected to report that inflation was 6.7 percent in November compared with a year earlier, according to economists surveyed by data provider FactSet. That would top October's 6.2 percent year-over-year increase.

The findings in the AP-NORC poll underscore the financial pressures that this year's spike in inflation has imposed on many Americans' finances. Still, as they have since before the pandemic struck in March 2020, a majority say their own finances remain good.

Yet many Americans have soured on the economy in the past year, even though most economic indicators point to a still-steady recovery, with near-record job openings, solid retail spending and a rebound in manufacturing. Only about one-third say the economy is "good," down from about half who said so in March. That may explain why President Joe Biden hasn't benefited politically from positive readings on the economy.

The poll, though, finds a sharp partisan split: Only about 1 in 10 Republicans describe the economy as "good"; more than half of Democrats say so. Yet when asked about their own financial situations, people are more positive and less divided along party lines. About two-thirds of Americans say their personal finances are in good shape. Roughly 7 in 10 Democrats and about 6 in 10 Republicans say so.

Analysts generally expect the economy to grow at a brisk 7 percent annual rate in the final three months of this year, boosting growth for all of 2021 to its fastest calendar-year pace since 1984. The unemployment rate has dwindled to 4.2 percent, from 6.7 percent a year ago. And with many employers struggling to hire, the economy still has nearly 4 million fewer jobs than it did before the pandemic.

And the government provided a $1,400 stimulus check to all households in March as well as a $300-a-week unemployment aid supplement from March to September. Most households with children began receiving the $300 monthly child tax credit in July.

Those government measures, combined with higher paychecks, lifted Americans' overall household incomes by 5.9 percent in October compared with a year earlier. Yet inflation jumped to 6.2 percent that month, the highest reading in three decades, negating the income gain.

Jason Furman, President Barack Obama's former top economic adviser, suggested that many people don't think about government payments, such as stimulus checks, when considering their own incomes because those payments are generally one-time windfalls.

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The AP-NORC poll of 1,089 adults was conducted December 2 to 7 using a sample drawn from NORC's probability-based AmeriSpeak Panel, which is designed to be representative of the U.S. population. The margin of sampling error for all respondents is plus or minus 4.1 percentage points.

The Associated Press contributed to this report.

Associated Press, Poll
A new AP-NORC poll finds half of Americans with household income below $50,000 say recent price increases are having a major impact on their finances, compared with a third of those in higher income households. Associated Press/AP Photo