Financial Insecurity Spurs Economic Issue

June 9, 2024

Stressed-out families on the wrong side of the wealth gap could put Donald Trump in the White House.

Concerns about the economy have been an ongoing bugaboo in the presidential race, to the great wonderment of liberal observers.  Inflation is behind us, they claim.  A slowdown was avoided.  We have nothing more than what they coined a “vibe-cession.”

They admit to being mystified by it all.

The answer to be presented here to their wonderment is logical enough, once it’s stated as such, and yet dismaying.  Exclusive research by Our Common Purpose shows a deep-seated anxiety is preying on a great many Americans.  Much of what is happening can be attributed to their angst over their own financial insecurity.

Price increases are the same for everyone but inflation is experienced very differently at the opposite extremes of the wealth gap, thereby creating a political gap of its very own.  This is not necessarily the political divide we know so well but at minimum an unexplored clash in perspective and priorities.  There’s a distinct difference between those who have a financial cushion and those who don’t, and it looks as if it will spill over onto the election.

These conclusions emerge from Our Common Purpose’s most recent public opinion survey. Among our many challenges as a nation, it is all the more difficult to be on the same page and of like mind if we are going in different directions financially.

The survey shows that virtually one-half of American households have less than $10,000 stashed away for a rainy day.  In round numbers, another one-quarter have between $10,000 and $100,000 in savings and investments, and the remaining one-quarter have something greater than $100,000.

The wealth gap isn’t anything new . . . but let it sink in for a moment.  One-half of Americans are living on the edge.  The ravages of inflation came along to further erode their precarious perch, and the comments they offer to the Our Common Purpose survey suggest that the alarms going off in their heads are not going away easily.

“ . . . My family is drowning and we aren’t alone,” a 45-year-old Democrat from well north of Phoenix.

“We’re broke,” a 36-year-old Republican from a rural town outside of St. Louis.

“We need help,” a 53-year-old Democrat from Clearwater, Fla.

If you think their pain wouldn’t have political fallout, think again. These folks are a disaster for Joe Biden.

In this particular survey, a nationwide poll of 1,800 likely voters conducted in February by SurveyUSA, Donald Trump had a lead of seven percentage points on the president.  Even so, Biden actually held an advantage in two of the three savings levels outlined above, the two representing higher savings.

He’s being cut off at the knees, however, by those with little or nothing in the bank.  They represent half of likely voters and Trump’s lead among them was monumental.

Upon deeper examination, we can begin to understand why.

In reply to the liberal commentators and economists who are at a loss to explain how anyone could complain about the state of the economy, The Atlantic’s Michael Powell has argued that the poor working class and lower middle class have legitimate reason to be upset.

The Our Common Purpose survey provides the direct correlation.  A person’s own financial security is, in fact, the heretofore unexplained link in explaining why the economy keeps popping up as the foremost issue in 2024.  The lower a person’s own wealth, the lower their opinion of:

• The national economy. Of those with savings under $10,000, 50 percent said the economy is doing poorly.  As savings go up, that percentage steadily diminishes, down to 28 percent for those with the most in the bank.
• Their local economy. Of those with the least savings, 54 percent characterized their local situation as weak.  As savings go up, the percentage again steadily declines to 25 percent for those with the most in the bank.
• Their own situation. Of those in the lowest savings level, 65 percent admitted they had serious financial difficulties, versus 9 percent of those at the highest level.

Strong as this correlation is, the result is not without some partisan coloring.

As the overall assessments of the national and local economies declined in lock step with respondents’ own financial prospects, at each step along the continuum Republicans had a dimmer view than Democrats.  For instance, the 28 percent of well-to-do shown above who rank the economy as poor?  Very heavily weighted to Republicans.  To lesser degrees, that pattern repeats itself.

And while the great many comments provided to the survey by the not-well-to-do are full of frustration and resignation, some turn to indignation.

The disgust and anger they express are most often directed at the president.  He is the arch-villain for some, a convenient scapegoat for others.  The criticisms are often coupled with concern about the swarm of immigrants they view as taking jobs and causing havoc, and less-frequent worries about the federal debt.

A number of these voters are no doubt a lost cause for Democrats even if the economy weren’t an issue.  Overall, the group tends a little more rural, more Southern, a little less educated.  By a few percentage points, they tilt more Republican, reflecting the flip that has occurred in the positioning of the two parties.  Nonetheless the gap is a small one, 41 percent Republicans to 38 percent Democrats, with the remainder being independents or no party preference.

The sobering part is that those living paycheck to paycheck are much too common to be confined to one demographic or another, or to one party or another.  They reside across the country, come in all age groups, with plenty of college grads in their number.  Significantly for Democrats, they also include disproportionate numbers of females and people of color.

The know-it-all reaction of liberal observers is to dismiss their concerns.  What’s the matter with these people?  What are they thinking?  How can they be so out of it?   But dismissing their concerns amounts to dismissing them entirely, and to write them all off is to write off the election.

Although they might be swayed by partisan influences on what to them are fairly abstract questions regarding the national and local economies, what they know for a fact is their own bank balance.

And when matters get close to home, there is very little partisan difference.  The 65 percent of the low-savings group who said in the last of the bullet points above that their immediate family is experiencing serious financial difficulties is made up of nearly equal percentages of Republicans (68 percent), Democrats (59 percent) and independents (also 68 percent).

The comments they offer are sometimes poignant and quite frequently worrisome.  Many are concerned, frustrated, scared.   Some express distress and even despair.

“It’s making me go under I really don’t know what I can do about it anymore,” a 53-year-old from Gary, Ind.

“I’m about to go bankrupt,” a 65-year-old from Albuquerque, NM.

“ . . . then those people become desperate and crime rates start to rise.  I’ve personally resorted to those extremes,” a 52-year-old from rural North Carolina.

“I am absolutely terrified about my financial circumstances . . . to the point suicide seems more realistic and promising,” a 42-year-old from Hawaii.

“Just feels like I can’t afford to live and, being elderly, this scares the hell out of me!” a 73-year-old from Bakersfield Calif.

Their reasons for being so financially vulnerable are probably as varied as they are.  It could be any combination of life circumstances, perhaps compounded in some cases by poor choices or bad luck.  Only six of ten consider themselves fully employed, the highest number in retail or wholesale trade.  On the other hand, a very small number make more than $150,000 a year with mortgages north of $300,000.  That subset appears to be living entirely for the moment, come what may.

Their lifestyles, how wise they are with their money, the decisions they make at the supermarket probably also vary widely.  But for a good many of them, there isn’t any wiggle room.  Getting by isn’t easy.  Life isn’t easy.

Hit first by the economic uncertainties of the pandemic, then the economic shocks of inflation and now of high interest rates, it is small wonder that those of lesser means are shell-shocked.  Price increases may be the same for everyone, but the pain they cause is anything but equal.

“We can’t afford groceries anymore. You have to choose which bills to pay and sometimes you have to choose whether you’re going to pay the bills or buy groceries,” a 33-year-old from rural Kentucky.

“Makes getting groceries a tooth pulling miserably stressful task, knowing you’ll have to blow a ridiculous amount of money for far less groceries than you would even a year ago,” a 20-year-old from Midland, Mich.

“Utilities are up $110 from last year. Gas for the car is up. Insurance is up. Food prices way up on needed items. I just can’t keep up any more,” a 19-year-old from New Richmond, Wis.

“You cannot even afford to heat your home so you live in a house that’s 40° cold.  The economy’s better?  I don’t think so,” a 51-year-old from the mountains east of San Diego.

“The economy affected me emotionally and physically. A lot of prices went up and my rent went up so high and my job isn’t paying that well so it’s hard to pay all my bills,” a 23-year-old from Homestead, Fla.

It would be hard to read the hundreds of these reflections and conclude they are anything but genuine.  And please, don’t even try suggesting that inflation has been tamed.

“I keep seeing prices stable not going up but every time I go to the store prices have went up,” a 52-year-old from a small town north of Greensboro, N.C.

“I would like to add that inflation has not slowed down. I don’t know where that’s coming from but it hasn’t slowed down. It keeps getting worse,” a 41-year-old from rural West Virginia.

“Inflation has not gotten better, it has gotten worse . . . The question said it got better, but there is no evidence in my entire state to come close to believing that,” a 23-yard-old from a small town in western Pennsylvania.

Perhaps some are confusing the definition of inflation, but then again maybe not.  Prices have continued to rise, albeit more slowly, and the Fed is now worrying that it could take several years to get the rate down to 2 percent – due to what it is calling “intrinsic” inflationary forces.

Those living paycheck to paycheck are the ones most negatively affected by the higher prices.  Now they are the ones most heavily penalized by the antidote to further increases . . . higher interest rates.

Only one-fifth are able to pay their credit card bill in full each month.  Interest rates on the mounting unpaid balance have skyrocketed to upwards of 30 percent, a factor that unfortunately is not incorporated into inflation calculations.

“It is hard to make ends meet . . . Two years ago my credit cards were all paid off now I owe $26,000,” a 74-year-old from Anaheim, Calif.

“Everything costs so much that I’ve had to use credit cards more than I would have liked.  Now the interest rates are so high that I can’t keep up with the payments on my debt.  It’s killing me and millions of others,” a 53-year-old from southern Illinois.

“Interest rates on credit cards are killing me,” 49-year-old from Canon City, Colo.

Wages supposedly are increasing to cover the difference, and that may eventually happen, but for the moment 70 percent of those living paycheck to paycheck say in the Our Common Purpose survey that pay increases haven’t kept pace or haven’t come at all.  Cost-of-living adjustments for those living off Social Security are a whole other problem.

Bottom line, the survey shows 56 percent of this group, representing virtually half of the population of the country, assess their standard of living as worse today than it was three years ago.

Unfortunately, the wealth gap itself isn’t going anywhere anytime soon.  The political gap attached to it is a little more open to attenuation, even if November is fast approaching.

Biden is faced with any number of challenges.  The Hispanic vote.  The Black vote.  Tackling the anxieties around financial insecurity would have the added benefit of regaining support on the other fronts.  Don’t tackle it, and the election will be lost.

He’s hoping the many billions being invested thanks to the Inflation Reduction Act, the CHIPS and Science Act, and the Infrastructure Investment and Jobs Act will trickle into many pockets.  This overall is the right approach, but it is a slow process and likely won’t have much of an impact on November.  Those who eventually benefit are unlikely to ever even recognize to whom credit is due.

When it comes to more directly dealing with inflation, Biden has seemed to be something of a reluctant warrior. His administration has chipped around the edges at the price of insulin, bank overdraft and credit fees, and the “junk fees” levied by airlines and others. Otherwise, however, he has made only halting attempts to hold big business accountable for what he terms “shrinkflation” and has resisted encouragement to more aggressively take on what others have criticized as “greedflation.”

In the absence of headline-grabbing actions to convince the masses he is on the case, some more obvious compassion would be in order.  Rather than questioning the legitimacy of the deep-seated anxieties of such a wide swath of the population, as some liberal observers seem so bent on doing, the better approach is to get out there and understand the immediate concerns, acknowledge the concerns, find short-term ways to address the concerns.

Instead of casting doubt and ridicule on so many, the least we need to do is recognize and acknowledge the stress they are under.