While people of all income levels have done a masterful job of navigating pandemic-related financial stress, new research from Deloitte finds that 2022 dealt many families more significant shocks, including record inflation, rising interest rates, turbulent equity markets and energy jolts.
As a result, four out of ten in its global research say their financial health worsened in 2022. Those in Europe are feeling the worst, and in the U.S., it's the highest level seen in over a decade.
While there's no clear indication that the economy is headed toward recession, no one seems exempt from the slump. One in three higher earners in the survey say their finances have turned worse, compared to nearly half of lower earners.
Those who perceive themselves as worse off are twice as likely to be worried about their level of savings (67% vs. 31%), twice as likely to say they will delay large purchases (67% vs. 31%) and twice as likely to fret about upcoming payments.
The ongoing research shows that as inflation rose, consumers changed their spending. In September 2021, people estimated that 26% of their monthly budgets went to discretionary categories. That's now fallen to 23%, with the most pronounced declines in the U.S., Italy, the U.K., Poland, Denmark and Germany.
"Many are heading into 2023 with a gloomier sense of financial well-being," the report says. "And it's a state of mind that's unlikely to disappear overnight. Those who feel their finances worsened cite concerns that could take time to subside—even if stressors like inflation gradually improve. And this sentiment is poised to inform purchase behaviors and spending intentions."
Yet it also points out that consumer spending intentions “have held up reasonably well against historic inflation. Throughout 2022, consumer industry leaders have pointed to resilience in consumer spending to defend more optimistic takes for the 2023 economy.”
The findings are from Deloitte's Global State of the Consumer Tracker, fielded monthly in 24 countries, with 1,000 adults in each country.