Financial confidence declines amid increased inflation, recession concerns: survey

Inflation has been hovering near a 40-year high

Financial confidence among U.S. adults declined this quarter amid increased concerns about inflation and a possible recession, according to a survey recently put out by BMO Financial Group.

BMO Financial Group said in late September that its Real Financial Progress Index found just over half of Americans (54%) reported making financial progress in the third quarter, an 8% drop from a year ago.

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The number of Americans who said they feel "more" financially secure dropped eight percentage points to 39% in the quarter and has fallen 11 points from a year ago, according to the survey. About 27% reported feeling "less" secure about their finances, rising 11% year-over-year.


The decline in financial confidence comes as consumer inflation remains near a 40-year high. 

Labor Department data showed the consumer price index in September rose 8.2% from the prior year and 0.4% from August, FOX Business previously reported. In August, the index also went up, climbing 8.3% on an annual basis and 0.1% on a monthly basis.

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About 74% of U.S. adults indicated their concerns regarding inflation have grown in the third quarter, BMO Financial Group reported. The survey, conducted by Ipsos among 3,400 adults between July 27 and Aug. 29, also found 84% are worried "about a recession occurring by the end of the year."

"From an inflationary perspective, it's hard to remember that people haven't seen this for like forty years, so it's not even in people's memory of what to do and what to expect during a time like this," Paul Dilda, BMO Financial Group's head of U.S. consumer strategy, told FOX Business on Monday.

There are, however, things Americans can do to help themselves financially during high inflation.

"At any time, a good financial plan makes sense, but when you’re in a cycle like this with inflation or just an economic downturn of any sort, it’s really good to assess and take stock of your situation," Dilda said. "And whenever you can, get advice from a banker or financial planner who can help you have a holistic view of your finances."

It’s important for people to look at how much they’re spending and saving, as well as how inflation has impacted them, Dilda said.


He noted bankers or financial advisers can also help "point you in the direction" of digital banking tools that may aid in a person’s review of their personal finances.

Another practice is determining whether ongoing expenses like streaming services, cable subscriptions and gym memberships can have their prices reduced or be gotten rid of altogether, BMO Financial Group said in a press release. Putting off large purchases can sometimes be beneficial, it said.

Over three-quarters of Americans said recession concerns are prompting them to plan lifestyle changes, according to the BMO Financial Group survey. Some of the reported lifestyle changes include postponing big purchases, planning to reduce holiday spending and paying down debt.

"Ultimately, what’s important is to have both a short-term and a long-term plan that you take action on and put in place," Dilda told FOX Business.

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Dilda also said BMO Financial Group has been seeing some people "allocate more to savings, recognizing that having that safety buffer in these uncertain times can be really important." Savings rates can go up during periods of increasing interest rates, he noted.


"It’s really important to talk to your banker or whichever financial institution you happen to use, because we’re starting to see now higher-rate interest rates on high-interest savings accounts or certificates of deposit — CD interest rates are rising as well," Dilda said. "So that could be an opportunity for anyone who’s looking to sock a little away and maybe earn a little interest and have your money work for you while you’re doing that."

The bottom line, Dilda said, is to "look at your situation, ask for advice and have a plan you actually take steps toward achieving."