74% of middle class Americans have cut back on non-essential spending due to inflation

74% of middle class Americans have cut back on non-essential spending due to inflation.

Consumer sentiment, a measure of Americans' economic outlook, has reached a six-month low, according to the University of Michigan's closely monitored index. This drop, the largest since 2021, underscores the ongoing impact of inflation on household budgets and heightens concerns about rising prices, unemployment, and interest rates potentially worsening in the coming months.

Subscribe to The Post Most newsletter for the most important and interesting stories from The Washington Post.

This growing pessimism is influencing consumer spending habits. Companies like McDonald’s, Home Depot, Under Armour, and Starbucks recently reported disappointing earnings as people cut back on fast food, home improvements, sneakers, and afternoon lattes. Retail sales were flat in April after modest increases in February and March. However, Walmart reported a strong first quarter, buoyed by high-income shoppers, according to executives.

Gas prices, despite easing in recent weeks, have risen overall for the year, just as the busy summer season approaches.

"For the last couple of years, the economy has been driven by household spending, and now people are starting to say, 'Let’s retrench here,'" said Jeffrey Roach, chief economist for LPL Financial. "The pressure from inflation has finally started to hit even upper-income households."

Although the economy remains strong, it has slowed in recent months as the Federal Reserve works to control inflation. Employers are adding fewer jobs, wage growth has decelerated, and Americans are postponing major purchases like homes, cars, and appliances.

This economic slowdown could impact the upcoming presidential election and pose challenges for the Biden campaign, which has struggled to convince Americans that the president's policies have improved their financial situations.

Polls consistently show that Americans favor former president Donald Trump over Biden on economic issues. In April, about 36 percent of Americans identified the economy as the country’s top issue, up from 30 percent in February and March, according to Gallup polls. Additionally, more people cited inflation and the high cost of living as major concerns compared to the previous month.

Unusual Whales does not confirm the information's truthfulness or accuracy of the associated references, data, and cannot verify any of the information. Any content on this site or related pages are not intended to provide legal, tax, investment or insurance advice. Unusual Whales Inc. is not registered as a securities broker-dealer or an investment adviser with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority (“FINRA”) or any state securities regulatory authority. Nothing on Unusual Whales should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security by Unusual Whales or any third party. Options, investing, trading is risky, and losses are more expected than profits. Please do own research before investing. Please only subscribe after reading our full terms and understanding options and the market, and the inherent risks of trading. It is highly recommended not to trade on this, or any, information from Unusual Whales. Markets are risky, and you will likely lose some or all of your capital. Please check our terms for full details.
Any content on this site or related pages are not intended to provide legal, tax, investment or insurance advice. Unusual Whales Inc. is not registered as a securities broker-dealer or an investment adviser with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority (“FINRA”) or any state securities regulatory authority. Nothing on Unusual Whales should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security by Unusual Whales or any third party. Certain investment planning tools available on Unusual Whales may provide general investment education based on your input. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your legal or tax professional regarding your specific situation. See terms for more information.