U.S. workers are acknowledging an improvement in the economy, but many continue to feel financially insecure.
Northwestern Mutual’s 2024 Planning & Progress study found that while the number of Americans who believe in an impending recession declined from 67% to 54% in 2024, 33% of respondents say they do not feel financially secure—a record-high for the study.
Inflation is the primary driver for these concerns, finds Northwestern Mutual. Respondents are skeptical that the federal reserve could reach its inflation targets in the year ahead, as 54% of U.S. households expect inflation to grow in 2024 and only 9% believe their household will outpace the volatility. This is particularly true among younger generations, with 62% of Gen Zers and 59% of Millennials anticipating a recession in 2024.
The continued effects brought on by the COVID-19 pandemic in 2020 still impacts employee wellbeing, notes Northwestern Mutual. Now, the added impact of inflation on cost of living and day-to-day spending has some feeling financially insecure.
“‘Financial shock fatigue’ and fragility are holding people back from positive feelings about their own financial security,” said Christian Mitchell, chief customer officer at Northwestern Mutual, in a statement. “Despite the growing economy, Americans have had to endure one financial disruption after another over the last several years, and it’s hard to feel positive when you don’t know what’s around the corner. The pace and scale of the financial uncertainty around them is leading to greater feelings of anxiety, analysis paralysis and an overriding sense that they’re always reacting instead of controlling their own destiny.”
Given the current economic conditions, 42% of respondents say they are prioritizing “playing defense” with their savings and investments by managing their financial risk in order to protect assets, either through cutting costs (56%) or building savings (51%).
This is compared to the 29% who will be “playing offense” by capitalizing on opportunities to grow their assets, either by investing more in the stock market (42%), in real estate (21%), high-yield bonds (21%), alternative assets like hedge funds and private equity (19%), and speculative investments like cryptocurrencies (17%), Northwestern Mutual says.
“People are recognizing that building wealth isn’t enough – they want to protect what they’ve already created, too,” Mitchell said. “This year, more Americans say they want to play better defense so the unexpected surprises that arise aren’t so disruptive to their financial lives. There are still great opportunities to save and invest in this environment, so Americans shouldn’t feel limited by a choice between protection and prosperity – they can and should choose both.”
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.