“Here we go again.”
It’s that kind of skepticism that Bankrate.com financial analyst Greg McBride said might undermine the economy as consumers once again grapple with high gas prices -- and the ripple effect that has on household incomes. With salaries generally not keeping pace with rising expenses, people’s spending power is being squeezed, undermining their confidence in an economic turnaround.
Consumer spending is critical to the recovery since it powers 70 percent of economic growth, McBride said. This month’s Bankrate.com Financial Security Index dipped down after posting some gains at the end of last year, illustrating the insecurity that the more than 1,000 Americans polled felt about their debt, net worth, job security, savings and overall financial situation.
“People’s feelings of net worth are still leaning towards the negative side despite the fact that the stock market is at a four-year high,” McBride aid. “Until we get a true bottoming in home prices, people are not going to be feeling the wealth effect. Gas prices are (also) a big factor and do pose a headwind to the economic recovery.”
The Bankrate.com poll found that Americans are sharply split on whether the recovery will continue throughout 2012. Interestingly, age and income levels served as the dividing line for many. Half of individuals polled expressed confidence in the recovery. Of them, 37 percent tended to be under 30, were college graduates, and were in households with income about $75,000 per year.
About 48 percent of those polled were not confident in the recovery; these individuals were mostly age 50 and up with household incomes of less than $50,000 per year. Many came from more rural communities.
Among retirees, those saying their financial situation is worse now than a year ago outnumber those saying it’s better by a ratio of 3 to 1.
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