Many middle-income Americans are still confident they can achieve financial prosperity despite inflation and rising costs, a recent survey said.
For 86% of the survey respondents, financial prosperity remains a worthwhile goal. What's more, 79% are optimistic that they will achieve it within the next decade, the Santander survey said.
Still, lingering inflation and the fear of a recession remain dark clouds for many, with 69% of respondents saying it could impact their financial prosperity. Sixty-seven percent said it's already affecting their ability to save and 60% said that they've had to make significant cuts to household spending to adjust for inflation.
"In today's uncertain environment, there's a prevailing notion that prosperity is slipping out of reach for many Americans, particularly middle-income households," Santander US CEO Time Wennes said.
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The Federal Reserve sent a signal at its last meeting that it remains committed to returning inflation to a 2% target rate. Fed Chair Jerome Powell said that while disinflation is still happening, the road to getting inflation back down to the target rate still had a long way to go and was "likely to be bumpy."
March's Consumer Price Index (CPI), a measure of inflation, came in at 5%, showing that inflation is moderating since hitting a record high last June. However, Powell noted that the strength of CPI readings this year shows that inflation pressures continue to run high.
"The fact that consumers are increasingly concerned about a potential recession while still expecting inflation to continue to fall suggests that they still believe the message that the Fed has been sending for some time and reiterated earlier this month," Jim Baird, Plante Moran Financial Advisors' chief investment officer, said in a statement. "Central bank forecasts call for inflation to remain above its 2.0% target beyond 2023, supporting their perceived need to remain vigilant and guard against stepping back from their tightening bias prematurely.
"Additionally, their forecasts reiterated an expectation that their tightening efforts will erode growth, leading to job losses and an increase in the unemployment rate in the coming months," Baird continued.
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Financial prosperity was defined as having the means to pursue life goals without having to make substantial financial sacrifices or tradeoffs, the survey said.
Here are what respondents identified as the top drivers of financial prosperity:
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