(The Center Square) – The majority of Americans’ finances are worse than they were a year ago and they are wasting savings to make ends meet as record inflation has sent prices skyrocketing, according to multiple reports.

Meanwhile, financial experts say stagflation warnings are surfacing as the White House says it hasn’t “missed much” on inflation and brags about economic growth.

About 70% of Americans are using their savings to cover the higher costs of goods that are blowing up their budgets, according to a recent investigation of 2,000 adults conducted by Forbes found. According to the survey, 67%, or “two-thirds of Americans say they are looting their savings as the prices of goods and services rise.”

Among them, 8% say they have completely exhausted their savings; 23% spent a substantial amount and 36% spent a small amount only because of inflation. Older Americans fare better, with 67% of those 77 or older saying they haven’t touched their savings.

But as real wages have fallen and consumer debt has risen, savings are shrinking for most Americans. According to a Bureau of Economic Analysis reportthe personal savings rate for April 2022 was 4.4%, the lowest level since September 2008.

Similarly, a “consumer expectations survey” from the New York Federal Reserve found the majority of respondents said their finances are worse today than they were a year ago. Spending growth expectations rose sharply in April to 9%, the Fed reported, “the fifth straight increase and another record streak.”

Those most affected are between the ages of 40 and 60 and have not had a college education, according to the survey.

Concerns about stagflation are also growing, the Fed found. Stagflation occurs when rising interest rates, rising unemployment, and slowing economic growth occur at the same time. While inflation is at a 40-year high and the Fed is expected to raise interest rates later this week, unemployment numbers are down, not up.

Recently polled economists also agree that the United States is likely to enter a recession in 2023, according to a report by the Financial Times. A third said recession could hit by the second half of next year; 40% said it would happen in the first or second trimester.

As inflation rose 8.6% in May from last May, the highest since 1981, consumer confidence also fell. According to the Consumer Confidence Board, consumer confidence fell to a three-month low in May – a key indication that a recession is near.

When assessing consumer data, “70% of our GDP is consumer spending, and consumers are about as bleak as they’ve ever been,” said George John, a professor at the University of Minnesota. Told WCCO Sunday morning. “So that tells me consumer spending is not going to continue, and that’s when you get a recession.”

Rick Rieder, CIO of global fixed income at BlackRock, echoed a similar sentiment. “More and more corporate announcements and earnings releases (or warnings) reflect a consumer who is now in a bad mood given the drop in net disposable income, and as a result, these consumers are significantly slowing their expenses,” he wrote. , as reported by CNBC.

Economists polled by the Consumer Confidence Board “do not expect the economy to pick up speed in the coming months,” he said. “Looking ahead, expect soaring prices and further interest rate hikes to pose continued downside risks to consumer spending this year,” the board warned.

The Fed is expected to raise interest rates this week by half a point or 75 basis points to offset inflation.

Some economists expect economy to slow as Fed hikes interest rates, MarketWatch reportsand “some companies have already reduced their hiring plans, and even canceled some offers”, he Remarks.

Bank of America chief investment strategist Michael Hartnett has warned that the U.S. economy is already in a “technical recession” and Federated Hermes chief stock market strategist Phil Orlando said consumers on the fringes are “not going to be able or willing to keep paying” skyrocketing prices, creating a “greater risk of stagflation,” CNBC reported.

Meanwhile, President Joe Biden last month vaunted that his administration created a record 6.7 million jobs and that in his first year in office the United States experienced “the fastest economic growth of any year in nearly four decades “.

A member of its Council of Economic Advisers, Jared Bernstein, Told MSNBC that he didn’t believe the White House “missed much” on inflation. He also blamed inflation on Russia’s invasion of Ukraine and variants of the coronavirus, even though inflation peaked in 40 years before Russia invaded Ukraine and states States have been dealing with the coronavirus for more than two years.

“Inflation is historically high everywhere,” Bernstein said. “So it’s certainly not about one country’s fiscal or monetary policy.

“I don’t think the White House missed much in the following sense,” he added. “We are not sitting idly by hoping that these forecasts of stable growth and slowing inflation come true.”