Inflation weighs heavy on Philadelphians' economic outlooks
Inflation has Philadelphians questioning the future.
Driving the news: Inflation is at a stubborn 40-year high. For most Americans, bills are getting more expensive and without a raise, they're effectively getting a pay cut.
State of play: Residents in the Philly metro expressed more pessimism about their economic prospects this spring, compared to a year ago, according to a recent McKinsey American Opportunity Survey.
- The consulting firm surveyed roughly 1,100 people between March and April of this year.
What they found: On a scale from 0 to 200, economic optimism was 98. The good news is that's one point higher than the national average.
- The bad news: it's six points lower than a year ago.
By the numbers: 60% of respondents reported an increase in spending on groceries.
- More than a quarter of respondents said they spend more on child care, housing, and health care, which is slightly more than the national average.
- Half reported spending more on utilities, 3% less than the national average.
- Half say they wouldn't be able to cover living expenses if someone in their household loses their job, which is three percentage points less than last year.
- Roughly 14% say they're spending more on education.
Between the lines: Respondents completed the survey as Russia's invasion of Ukraine pushed food and energy prices higher and higher.
- "The uncertainty of the present environment isn't going away," Ryan Luby, an author of the study, tells Axios.
Be smart: Watching consumption of utilities and groceries — both essentials — is an indicator of how families are faring.
- When inflation rises, the expectation is for spending to rise. So when people are not, that means people are consuming less. That's concerning if they're spending less on items required to live.
- "Households are being forced to make pretty cruel decisions around what they're spending their money on and whether their homes are heated, cooled, or putting groceries on the table," Luby said.
What's next: The inflationary moment we're in won't last forever, as Axios' Javier David has reported.
- Luby anticipates an 18-month minimum timeline to get to low inflation.
The bottom line: Overall, the average Philadelphia consumer is feeling more squeezed compared to the national average, according to Luby.
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