How will the outcome of the 2016 presidential election affect the economy and the financial well-being of individual Americans? Although long-range uncertainty remains, a new survey by Experian indicates that many Americans are optimistic about their personal financial outlook for the next four years, even if they're less confident about the election's impact on the nation's economy as a whole.
Immediately following the election, Experian surveyed 1,000 voting-age Americans to get their take on finances. Sixty percent of respondents said they voted in the election and 36 percent reported they had not. Across a variety of political ideologies, ages, race, region and ethnicities, certain commonalities emerged, including:
- Most feel their own personal finances will improve over the next four years under the new administration.
- More than one-third of those surveyed expect to make drastic changes to improve their finances in the next four years, such as getting a better-paying job or increasing their personal savings.
"With macro changes looming ahead for the entire country, it's natural for individual Americans to reassess their personal situations, especially in relation to finances," says Rod Griffin, director of public education at Experian. "Many people begin the year by reviewing their finances and budgets, checking their credit reports and credit scores, and creating or updating their plans to reach their financial goals. In the wake of a contentious election year, it makes sense people will be considering how the outcome will affect their finances going forward."
Slightly more than half (51 percent) of Americans who responded to our survey said they believe their own personal finances will improve, showing individual confidence. In contrast, only 37 percent felt that everyone's financial status will improve over the next four years.
These feelings do seem to vary depending on the party the respondent identifies with, however. Among those surveyed, people who didn't vote (abstainers) were more likely to feel that the financial status of Americans will stay the same or decline. As you might expect, Republicans expressed greater optimism, with 77 percent foreseeing improvement in everyone's financial status. Just 19 percent of Democrats and 44 percent of Independents agreed with their rosy outlook.
Pessimism seemed greater among those who didn't vote; just a quarter of abstainers said they thought Americans' overall financial condition would improve, while 38 percent thought it would stay the same and 37 percent expect a decline.
The majority of respondents based their opinion of the country's economic future on macroeconomic factors, such as employment rates (49 percent), their cost of living (36 percent) and inflation rates (29 percent). Interestingly, while most respondents viewed the national employment rate as a key factor in their assessment of the future, just 13 percent thought their own employment status was a factor. And the stock market, which fluctuated wildly immediately before and after the election, was a factor for just 18 percent of respondents. People in lower-income households were more concerned with the cost of living in their area, while more affluent Americans gave greater consideration to the stock market.
Americans' post-election actions
The majority of all respondents indicated they took some action in response to the outcome of the election (55 percent). Of those who acted, 20 percent read news reports on how the outcome of the election was likely to affect the economy. In fact, watching the news was by far the most common action, showing that many people were looking to be more informed in general. Some of the other actions involved more attention to personal situations. Ten percent checked their investments, 9 percent started a budget, 6 percent checked their credit score, and 3 percent started a long-term financial plan. The election results were clearly a catalyst for many people to take a deeper look at what's going on across the country and in their own financial portfolios.
Financial changes Americans will make
Despite general optimism, many Americans plan to make changes to improve their finances. In fact, 35 percent of survey respondents said they will make a "drastic" change. The top changes cited, tied at 43 percent, include looking for a better-paying job and increasing overall savings. Thirty-nine percent of those surveyed said they will decrease their spending. This shows that many people plan to take their own positive steps in their own lives to better their finances. Other changes that relate to credit are also planned amongst survey respondents, such as paying off outstanding loans or debts, using credit more responsibly, and paying off credit cards on time. Regardless of what triggers these actions, steps like these can always help when it comes to taking control of one's own financial landscape.
Among those survey respondents who think their personal finances will get worse over the next four years (21 percent), the steps they plan to take to address this include cutting back on expenses (66 percent), getting an additional job (34 percent) and selling off personal possessions or assets (18 percent). Just 14 percent said they intended to take steps to improve their credit scores, even though credit standing is a key factor in overall financial well-being.
The top financial goal for the next four years for all respondents is to save more (41 percent), followed by being a smarter shopper (12 percent) and paying off credit card debt (10 percent). Saving is a big issue for many Americans and often its a struggle to balance paying bills, saving for retirement and building an emergency fund. Many of the financial goals cited are steps that can help improve credit, such as paying credit card balances in full every month (cited by 5 percent) and checking credit scores and reports more often (cited by 2 percent).
Respondents were also thinking ahead beyond the next four years, and there are a variety of concerns that came up. The most-cited long-term financial concern was not having enough saved to retire (21 percent). Future medical costs causing financial setbacks, an inability to become financially independent, and not being able to support their families concerned 12 percent of respondents, while being unable to pay off debt worried 9 percent. Respondents also worried over identity theft, potential stock market losses, and not being able to pay for kids' college or care for aging parents.
A desire for more leadership action
Regardless of their expectations for their own personal finances, a majority of poll respondents agree that the U.S. government does not do enough to protect the financial well-being of citizens.
The greatest area of dissatisfaction relates to the risk of identity theft. Fifty-eight percent said the government doesn't currently do enough to protect people from identity theft. Given the concern around identity theft, it's not surprising that 57 percent also said the government needs to do a better job of protecting people's personal information. Identity theft is a growing threat and while there may be things that people look to the government for, there are also many steps individuals can take on their own to protect themselves from identity theft and fraud.
Respondents also felt the government isn't providing assistance by:
- Making student loans accessible to everyone (47 percent).
- Making business loans more accessible (42 percent).
- Keeping interest rates low (44 percent).
- Making home loans more accessible (42 percent).
Interestingly, dissatisfaction with government protections was higher among those who said they didn't vote. Abstainers were significantly less happy than voters with government action for every point cited, with the most significant differences in opinion occurring over interest rates and business loans. While 36 percent of voters felt the government could do more to hold down interest rates, 57 percent of abstainers felt the government isn't doing enough. And 48 percent of nonvoters feel the government needs to do better at making business loans accessible, while a lesser 38 percent of voters agree.
While they may see many things differently from one another, people from all three major political parties (Republican, Democrat and Independent) feel similarly about the desire for greater government protections. When it comes to protecting people from identity theft, 56 percent of Republicans and the same proportion of Independents want the government to do more, while 54 percent of Democrats agree. Independents are most concerned about protection of personal information, with 59 percent saying the government doesn't do enough, where 54 percent of Republicans and 52 percent of Democrats agree.
Americans' financial snapshot
After probing how respondents felt about the country's financial prospects and the government's performance, Experian's survey asked Americans to describe their own personal financial management. While the majority (56 percent) felt they are responsible in their financial actions, and 32 percent consider themselves "knowledgeable" about finances, both statistics show room for improvement.
Our survey results do seem to indicate a lack of knowledge may be hampering Americans who want to adopt sound financial behaviors. Just 11 percent of those we surveyed said they were impulsive with their finances, only 7 percent felt neglectful and just 5 percent described themselves as financially frivolous.
Actions for the new year
The new year is a great time to review your finances and budget, check your credit scores and credit report, and create a plan to reach your financial goals.
Some steps that can help you take positive steps with your own overall financial well-being include:
- Reviewing your personal and household budgets. If you don't have a budget, initiate one. You can find advice for building a budget from many online resources.
- Establish an emergency fund. Set aside money in a savings account to help pay for any emergency expenses that arise, such as an unexpected auto or home repair.
- Check your credit report and scores. Your credit report is a snapshot of your credit health, and credit scores are an important indicator lenders usually consider when deciding whether to give you credit and what interest rate to offer.
- Review your retirement savings to see if you should be investing more or if you're on track to reach your retirement goals.
- Re-evaluate your financial goals, both short-term and long-term. You may also consider talking to a financial adviser to see if your current financial actions will help you achieve your goals or if you need to make adjustments.
The data points referenced in this report come from a study commissioned by ConsumerInfo.com, Inc., an Experian company, produced by research firm Edelman Intelligence and conducted as an online survey of n=1,000 adults nationwide who are of voting age (18+ years old). Interviewing took place from November 10- 21, 2016. The margin of error is plus or minus 3.1 percent.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer, or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.