Half of Americans feel worse off financially, highest since 2009

Americans haven’t felt this lousy about their finances since the Great Recession.

When asked about their financial circumstances, half of Americans said they were worse off now than they were a year ago, according to a new Gallup poll conducted in January of 1,011 adults aged 18 and older. The only other instances that half or more felt this way was in 2008 and 2009, according to the pollster, which has asked this question since 1976.

The pessimism largely came from those in the lowest-earning and highest-earning tiers, according to the poll, the groups most likely to feel the effects of runaway inflation and the swooning stock market, respectively.

The silver lining? Americans feel like next year, their circumstances will get better, according to the poll.

‘How is this going to get better?’

A larger share of lower-income Americans were pessimistic about their money situation this year.

The survey found that 61% with household income below $40,000 said their financial situation had crumbled in 2022, versus 41% last year. Just over a quarter indicated they were on better financial footing, according to the survey.

The cost of daily living is taking a toll on finances for many Americans, but “the inflation issue is just magnified for low-income people,” Joanna Ain, associate director of policy for nonprofit Prosperity Now, told Yahoo Finance. “They’re feeling it on a day-to-day basis.”

“During the pandemic for better, for worse, we as a country were supporting people in a bunch of different financial ways,” she said. “And then those are gone now. It's not like those were lost, and prices came down, and things went back to normal. Things continue being difficult for families.”

Ain is referring to the pandemic enhancements for the Earned Income Tax Credit (EITC), for example, which ramped up the tax break’s eligibility. That expired for the 2022 tax year, leaving millions of Americans either unable to claim it or qualifying for a reduced amount.