Majority of Americans fear a recession is coming, survey says

Americans are more worried about inflation than they were three months ago and many said that they fear a recession is near, according to a recent survey. (iStock)

A majority of Americans are concerned about rising consumer prices and inflation, as well as the U.S. economy entering into a recession, according to a recent survey from the Bank of Montreal (BMO).

Seventy-four percent of Americans said their apprehension about inflation has increased over the last three months, and 84% said they believe an economic downturn could occur by the end of the year, according to the bank's Real Financial Progress Index released in late September.

Older Americans expressed more concern than younger ones about the impact that higher costs and inflation are having on the economy, according to the BMO survey.

Of the respondents between ages 55 and 64, 82% said their concerns about inflation increased. This is compared to 62% of those between ages 18 and 24, and 70% of those between ages 25 and 34.

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More Americans feel financially unstable

Seventy percent of respondents reported that rising gas and food prices had stymied their financial momentum, the survey said. And a growing number of respondents said they felt less financially secure this year than last year.

The portion of Americans who said they felt "less" financially secure rose to 27% in the second quarter of 2022 compared to16% at the same time a year ago. Americans who reported being "more" financially secure decreased to 39% from 47% in the first quarter and 50% a year ago. And the number of Americans who said they are making financial progress decreased to 54% from 62% a year ago.

The survey results highlighted the importance of tracking financial progress so that Americans can stay on track with their plans during inflationary periods and economic downturns, BMO said.

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Some consumers delay big-ticket purchases to prepare for recession

Economic uncertainty has prompted 76% of Americans to cut spending in several areas to prepare for a potential slowdown, according to BMO. Here's where they're making adjustments:

34% are delaying major purchases, like a new home or car.
29% are paying down debt.
28% are planning to cut back on holiday spending.
24% are allocating more income to savings.
14% are staying in a job they don't enjoy.

Delaying big-ticket purchases could make financial sense since higher prices may be temporary and could drop once inflation ebbs, the bank said.

"It's clear that Americans are feeling the weight of inflation with concerns of a recession in mind, and now, many are going so far as to put off their home buying journey or buying a new car," Paul Dilda, BMO's head of consumer strategy, said. "BMO's findings only underscore what we know is crucial right now - that everyone should look at their finances and develop a solid plan after talking with their banker or financial advisor.

"With the right advice and tools, people can continue to reach their financial goals and make financial progress through inflationary periods," Dilda added.

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