A recent poll conducted by Gallup in September reveals that the economic wellbeing of most American families appears to have dwindled in comparison to four years ago. Of the people surveyed, only 39% said they were in a better financial position, while a significant 52% felt worse off. This is the most pessimistic result ever presented in a presidential election year for this particular question, which Gallup has been asking consistently since 1984.
The survey was designed to gauge public perspective on household financial stability during presidential terms and the potential inclination to vote for the current candidate or party. The exceptional circumstances of the year 2020 make this year's survey particularly impactful. The autumn of 2020 indeed marked not only an uncertain era for the country but also for the economy, hit hard by the COVID-19 pandemic.
Back then, the virus was rampaging without a widely available vaccine, causing thousands of deaths weekly. Public health measures including restrictions on gatherings and mask mandates had a drastic effect on business activity.
Looking at key indicators of American financial health and overall economic performance, clear changes emerge since 2020. That year, while the economy was beginning to recover, the joblessness rate was still high at 7.8%. As of September 2024, the rate has significantly dipped to 4.1%. Job market resilience is a positive economic aspect, resisting anticipated recession fears.
Living standards are governed by the relentless battle between income and inflation. The inflation surge following pandemics was overwhelming for many households. Although inflation rates have since slowed down, average paychecks have consistently improved.
The home market experienced a boom due to the transition to a home-based work culture. However, rising home prices and eventually mortgage rates have made home ownership less affordable. The Federal Reserve data of August indicates the average monthly payment for a new house is $2,997, taking up 42% of the median monthly income. This is a marked rise from the September 2020 rate of $1,656, representing 29% of income.
Safety nets available for unemployed workers have changed massively since 2020. While significant relief was offered during the pandemic, including increased food stamps, free school lunches, and eviction bans, most of these programs have ended by 2023. The halt on federal student loan payments also resumed in 2023, proving to be a significant burden on many of the country’s 43 million borrowers.
Despite the many challenges, some households managed to save more in 2020 as business closures limited spending opportunities, coupled with continued income thanks to government relief programs. However, with economies normalizing, the savings rate has since dropped while credit card debt continued to rise.
On a different note, the stock market has thrived, with the S&P 500 index up nearly 70% from September 2020 to September 2024. While this boost has increased household wealth, it mainly benefits wealthier households owning the majority of stocks.
In all these developments, there are signs of resilience and signs of increasing financial tension. For instance, more people have overdue credit card payments, indicating growing financial stress. Overall pessimism about personal finances and the economy seems to be a consistent sentiment, regardless of data suggesting otherwise.