The U.S. labor market has dramatically improved since the coronavirus outbreak first swept the nation more than a year and a half ago, but a new Bankrate poll finds that Americans are still worried about its lingering effect on the economy — and their wallets.
Nearly 2 in 5 Americans (or 39 percent) cited the pandemic as the dominant threat to the economy over the next six months. That fear trumped the political environment in Washington (21 percent) by almost two-fold. Worries about inflation (14 percent) came in a distant third. Illustrating the concern, more than 3 in 5 Americans (or 63 percent) are worried that those threats could negatively affect their jobs or incomes over the same time frame, the poll found.
Vaccinations and loosening restrictions have helped U.S. economic growth bounce back to pre-pandemic levels, while some economists say the financial system is on its way toward the fastest annual growth rate since 1984. Yet, headwinds could still knock the financial system off course, from the rapidly spreading Delta variant to slowing vaccination rates and outbreaks abroad.
“Americans continue to see the coronavirus pandemic as the biggest economic threat of the next six months, and 63 percent of Americans are concerned about their jobs and incomes taking a hit,” says Greg McBride, CFA, Bankrate chief financial analyst. “Nervous households are less likely to spend, and recent pullbacks in travel and consumer discretionary purchases bear this out.”
Economy’s biggest threats: Pandemic, politics and price increases
Americans saw the pandemic (39 percent), politics (21 percent) and inflation (14 percent) as the top three threats facing the U.S. economy, though other concerns made the list, including:
- Political or economic developments overseas, at 9 percent;
- Terrorism, at 8 percent;
- An unexpected rise in interest rates, at 4 percent;
- A decline in the stock market, at 3 percent; and
- “Something else,” at 1 percent.
Meanwhile, less than 1 percent of respondents foresaw no immediate threat to the economy over the next six months. Less than half a percent said, “Don’t know.”
Americans pointed to the pandemic over politics as the biggest threat to the economy for the second straight survey, and the margin between the two issues has grown notably post-election. When Bankrate polled respondents in October 2020, less than a month before the 2020 presidential elections, 44 percent saw the coronavirus as the biggest economic threat, versus 34 percent who pointed to the presidential elections.
Before COVID-19, the political environment in Washington was a runway top choice as the biggest economic threat in previous polls, with 38 percent citing it in April 2017, 36 percent in September 2017, 43 percent in November 2018 and 44 percent in April 2019.
Americans’ see different threats based on their age and political affiliation
Still, Americans’ ideas about the biggest threats depended on how old they were and whether they identified as a Republican, Democrat or independent.
Baby boomers (those between the ages of 57 and 75) and Republicans were more likely to cite Washington politics as the biggest threat to the economy over the next six months, both at 32 percent, respectively.
At the same time, nearly half of millennials (those between the ages of 25 and 40) were most likely to point to the pandemic as the biggest economic threat in the next six months, at 48 percent, followed by Gen Xers (those between 41 and 56) at 41 percent. The pandemic was also the predominant concern among every income group, level of educational attainment and region of the country, the poll found.
Even more surprising, however, lower-income groups who tend to fare the worst in higher inflationary environments didn’t indicate major concerns about rising prices. About 14 percent of Americans who earned under $30,000 a year indicated that it was their top concern for the U.S. economy in the next half-year. For those who earned between $30,000 and $49,999 a year, inflationary concerns were tied with political concerns, both at 19 percent. Twice as many White and Hispanic Americans (at 14 percent and 19 percent, respectively) were concerned about inflation than Black respondents, at 7 percent.
That comes as Americans are identifying that price increases have impacted their wallet. An August Bankrate report found that 89 percent of adults have noticed rising prices, with 66 percent of those participants indicating that their finances have taken a hit from it.
“While inflation is on everyone’s radar, it is far from the biggest risk,” McBride says. “Just 1-in-7 Americans see inflation as the biggest economic threat in the next six months, and even among households earning less than $50,000 per year,…