A new survey of consumers shows a declining level of confidence in their short-term financial outlook.
According to Bankrate’s Financial Outlook Survey, 55 percent of consumers who were questioned don’t expect their financial situation to improve in 2019. This includes 12 percent who think their situation will be worse and 44 percent who think it will stay the same.
It follows a December Bankrate survey that found six in 10 employees received neither a raise in their current job nor a better paying job last year, a sizable increase from 2017.
The survey was taken during the time of the current government shutdown, which could have some effect on the outcome. Mark Hamrick, Bankrate’s senior financial analyst, says a shutdown of the federal government can have a big impact on consumer confidence.
“If you think about, first of all, just that in general, the erosion of confidence in institutions and then you think about essential developments in recent years with respect to government shutdowns, the divisive nature of national politics and the lack of the ability on the part of elected leaders to forge productive and constructive solutions to major problems — it is understandable why people may feel that way,” Hamrick said.
The current government shutdown is now the longest on record. President Trump is demanding that legislation funding the government include some money for starting construction of a wall along the U.S. border with Mexico. Democrats in Congress have refused to consider such a proposal.
Not the only factor
But the stalemate in Washington is not the only factor that appears to be providing a drag on confidence. While employment prospects remain positive, consumers say the rise in interest rates is causing economic hardship, suggesting that many are carrying credit card balances that get more expensive every time the Fed raises interest rates.
But it turns out not everyone is pessimistic about the economic future. Millennials are markedly more optimistic about the economy.
Nearly 60 percent of young adults in the millennial generation predict their financial fortunes will improve in 2019. Economists say that’s surprising considering how much student loan debt this generation is carrying.
Millennials are not the only ones going into the new year with an increased degree of optimism. Nearly half -- 44 percent -- of survey respondents think 2019 will be a better year financially. More than half think they’ll earn more money this year and nearly 40 percent think they can reduce their debt.