By TIPPINSIGHTS EDITORIAL BOARD, TIPP Insights
As 2022 winds down, Bidenflation has increased Americans’ financial stress to the highest level since 2008, the year of the financial meltdown.
The financial stress index in 2022 averaged 67.6 compared to the 2008 high of 68.4. The chart presented below shows the average stress index for each year.
President Biden deserves blame for skyrocketing food and energy prices in 2022 and raising Americans’ financial stress to a 14-year high.
The IBD/TIPP Financial Stress Index is a one-of-a-kind financial stress metric. In December 2007, we began using it to track financial stress. The index accurately indicates Americans’ financial concerns about paying bills and making ends meet. Consumer spending drives two-thirds of the economy. When people are stressed, they are hesitant to spend money.
There is another aspect too. Financial stress can lead to insomnia, weight gain (or loss), depression, anxiety, relationship difficulties, social withdrawal, and other physical ailments such as headaches, gastrointestinal problems, diabetes, high blood pressure, and heart disease.
We computed the stress index from responses to the questions: Thinking of your personal finances, compared to the past three months, do you feel more stressed these days, less stressed these days, or feel the same level of stress?
The index ranges from 0 to 100; the higher the number, the more stress. A reading of 50.0 is the neutral point.
On a positive note, the Investor’s Business Daily/TIPP Financial Stress Index weakened for the second consecutive month. The index declined by 2.5 points, or 3.7%, from 67.8 in November to 65.3 in December. The index has dropped by 4.5 points, or 6.4 percent, from the pandemic high posted in April 2020.
Persistent Bidenflation, a bear market, job displacement due to vaccine mandates, the Great Resignation, layoffs, and job insecurity exacerbate financial stress.
The December reading of 65.3 is below the index’s three-month moving average of 67.5, reflecting positive momentum.
The chart below shows that financial stress impacts all Americans irrespective of their party affiliation. Democrats (64.2) have the lowest stress. Republicans’ stress level is 3.2 points higher (67.4). Independents fall between at 65.2, very close to the level for all respondents at 65.3.
The overall standard deviation of the index readings for the 34 months is 4.1. It is very similar to the 4.1 for Democrats and 4.3 for Independents. Republicans’ standard deviation was higher at 7.0.
By The Numbers
The table below shows the index’s historical averages, December readings, and differences across demographic groups. Note that all groups, but one, have positive deviations of 10% or more from their historical averages, indicating elevated stress levels. Of the 36 demographic categories, 21 (60%) experience stress, 10% higher than their historical average.
Here are the ten demographic groups with the highest stress levels based on a three-month simple moving average. White women are the most stressed group. Politics drives some of the financial stress. Conservatives and Republicans are worried about the Biden administration’s policies.
The chart below shows the ten demographic groups with the least stress. The least stressed groups are Black, Hispanic, age group 18 to 24, and Democrats.
As the country recovers from the pandemic, it faces the stagflation monster. When talking about inflation, President Biden needs to consider Americans’ financial stress and address it in a way that is sensitive to their feelings.
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