For Grace Perry, the choices at the grocery store checkout line in Texas have gotten painfully simple.
“If you are an individual living on Social Security or working a minimum wage job, you can’t,” Perry told Scripps News. “You’re having to make a decision. Gee, do I pay the power bill or do I buy groceries?”
That frustration is now showing up in the data. Consumer confidence fell to 81.9 in September, its lowest level since 2014, according to the Conference Board. That’s below the levels recorded during the COVID-19 pandemic, and more Americans now describe their personal finances as bad than good.
The Federal Reserve’s preferred inflation gauge, the personal consumption expenditures price index, showed prices up 3.4 percent in August from a year earlier, according to the U.S. Bureau of Economic Analysis. Core inflation, which strips out food and energy, came in at 3 percent.
Both readings were lower than economists expected, but still, both remain well above the Fed’s 2 percent target.
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August’s report is the first to use an updated government formula for measuring certain prices, and its not yet clear how much the new formula lowered August’s numbers.
The same report shows Americans are still spending, even as paychecks lag. Consumer spending rose 0.9 percent in August, while personal income rose 0.2%. After taxes and inflation, disposable income didn’t grow at all, and the personal saving rate stood at 4.1 percent.
Scott Martin, a partner at Kingsview Wealth Management, said rising costs are hitting households from every direction.
“Everybody’s feeling some sort of malaise,” Martin said. “They’re feeling some sort of direct impact from oil prices, from the war overseas, geopolitical issues, interest rates that are starting to go up more.”
So why is spending still climbing? Martin said it depends on who’s doing the spending. While some middle to upper class families are seeing more returns on investments and feel boosted by profits, families in other economic scenarios are finding themselves spending more for basics as prices increase, and theyre giving up discretionary spending to do so.
“So, unfortunately, it’s what they call a K-shaped economy, where some go up and some kind of go down, but they go down at a stark rate,” Martin said.
For families already stretched thin, Martin said dipping into savings isn’t necessarily a reason to panic, but piling on high-interest debt is.
“I wouldn’t tell people to get super scared and freaked out about maybe tapping into savings if they need to,” he said. “I would tell folks to try to limit taking on extreme amounts of debt: credit cards, borrowing, things that carry high interest rates.”
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He’s especially wary of Buy Now, Pay Later plans.
“I kind of think of it as buy now, pay never,” Martin said. “You’ve brought on a lot of debt, but the debt isn’t the problem anymore. You know what it is? The interest rate.”
Energy remains one of the biggest pressures on household budgets. The national average for a gallon of regular gas is $4.46, according to AAA, up from $3.14 a year ago. Diesel, which fuels the trucks and farm equipment that move food to grocery stores, averages $6.44 a gallon, after hitting a record high of $6.53 on Sept. 22.
To try to ease prices, the Energy Department on Tuesday offered to lend energy companies up to 40 million barrels from the Strategic Petroleum Reserve. It’s the last portion of the 172 million barrels the U.S. pledged in March as part of a 400-million-barrel release coordinated by the International Energy Agency.
The oil is a loan, not a sale: companies that borrow it must return more barrels than they take. Bids are due Oct. 6, and deliveries are scheduled for November and December, meaning most of that oil wouldn’t reach the market until around Election Day or later.
It’s also not clear companies will take the offer. When the Energy Department first offered the same 40 million barrels in June, only about half a million barrels were awarded.
D. Stephen Voss, a political science professor at the University of Kentucky who studies elections and voting behavior, said these economic factors could be the last straw for some voters who are thinking about breaking from their typical party vote.
“Bad economic conditions lead to a backlash against the president’s party,” Voss said, calling it “the one scientific law of voting behavior.”
Voss said voters tend to judge the parties by what they’ve lived through, not by what candidates say they’ll do.
“Promises can be worth nothing,” he said. “What you’ve experienced the last few years is worth something. Voters trust that.”
He said that pattern holds no matter which party controls the White House.
“Each party can give spin for why it’s the other side’s fault that voters are suffering,” Voss said. “But after those technical arguments get done, when a lot of voters say, I don’t want to hear it, I’m just going to blame who’s in the White House.”
The Conference Board data shows the drop in confidence cuts across party lines. Over the past year, Republican confidence fell 15 points, while confidence among independents fell 4 points and among Democrats fell 5.
Voss added that the effect often reaches beyond the top of the ticket, as people voting in local elections are making decisions based on how they feel about lawmakers at the national level.