April 25, 2024
World Economy

The ‘vibecession’ has gone global

  • Despite a strong global economy, roughly half of adults are stressed about their personal finances in every country studied around the world, according to new CNBC|SurveyMonkey data.
  • The survey of more than 4,000 adults in the U.S., Mexico, Australia, Singapore, the UK, Spain, France, Switzerland, and Germany found that inflation and rising prices are still the No. 1 source of concern about money.
  • The International Your Money Financial Security Survey finds that more than half of adults around the world identify as middle class, but half of these people say they are living paycheck to paycheck.

Jasmin Merdan | Moment | Getty Images

Ask someone on the street how the economy is doing today and they are likely to say, “Not well.”

Between inflation, layoffs, geopolitical tensions, and recession worries, economic uncertainty has hit the average person in many ways. And yet, according to most major metrics, the global economy is doing just fine. We’ve avoided a major economic downturn according to the IMF, although global growth remains modest. Most experts agree that pandemic supply chain issues have largely been resolved. And although experts continue to keep an eye on global unemployment, joblessness has dropped below pre-pandemic levels.

The health of the global economy, though muted in some areas, is not being reflected in the perceptions of the average person. This disconnect is clear in the results of the new CNBC|SurveyMonkey International Your Money Financial Security Survey. Despite the performance of the economy writ large, roughly half of adults are stressed about their personal finances in every country studied around the world.

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

Rising prices and pessimism about the next generation

The survey of more than 4,000 adults in the U.S., Mexico, Australia, Singapore, the UK, Spain, France, Switzerland, and Germany found that around the world, roughly half of adults are stressed about personal finance. Inflation is the leading financial stressor among adults globally. Across all countries, nearly half of all adults (or more) cite rising prices as a contributing factor to financial stress globally. This number was highest in Germany (66%) and the United States (65%), and lowest in Switzerland (48%) and Singapore (46%).

There also seems to be a pessimistic view of long-term economic health. Parents who say they expect their children to be better off than they are financially are the minority in all countries except for the U.S., Mexico, and Singapore. Optimism is especially low in Europe — it’s the lowest among parents in Spain and France, with 43% of parents in France and 42% of parents in Spain thinking their children will be worse off than they are.

Notably, Singapore (60%) is the only country where the majority feel better off financially than their parents were at the same age. Germany and Spain report the lowest numbers, with just 28% of respondents in both countries who feel better off than their parents. In the U.S., only 37% feel they are better off than their parents were at the same age.

Middle class — but also living paycheck-to-paycheck

More than half of adults globally consider themselves to be part of the middle class, with the exception of those in the UK, where only two in five (37%) consider themselves to be middle income. European countries (except for the UK) have among the highest share of adults who identify as middle class, compared to only slightly more than half in the US (54%).

Notably, contrary to common perceptions of financial stability, nearly half of adults globally who identify as middle class also report living “paycheck to paycheck.”

Not enough saved for retirement

France and Singapore report the highest number of adults who are on schedule or ahead of schedule for retirement savings. Conversely, only about half of adults in the U.S. (47%), Australia (50%), and Germany (51%) are on track or ahead of schedule with retirement planning.

With the varying levels of retirement preparation, it’s no surprise that most adults expect to receive government assistance in retirement. France (39%) and Germany (33%) have the largest share of adults who expect to not need government assistance in retirement. In contrast, 83% of Singapore, 79% of Australia, 77% of Spain, and 74% of the U.S. expect to rely on the government to some degree in retirement.

Despite the majority of respondents expecting to need government support in retirement, many lack confidence in their government’s ability to actually support them. France (34%) and Germany (35%) have the least confidence that their governments can support them in retirement. Singapore is far and away the most confident in this regard, with 78% reporting they are confident their government can offer support. In the U.S., less than half (42%) of respondents are confident that the government will support them in retirement.

In general, savings are crucial. A lack of savings is a leading cause of financial stress in all countries except for France. Only about half of adults in nearly all countries report having an emergency fund, with Singapore leading all countries with 73% of adults with money set aside for emergencies, and France the lowest at 40%.

An unsustainable financial future?

What would financial security look like? According to our respondents, it would include no debt, home ownership, and high levels of savings.

Getting there is harder than ever. While strategies vary across countries, the most common paths to financial security are frugality and having a well-paying job. Adults in the U.S., Australia, the UK, and France say they value frugal living as a path toward financial security. Meanwhile, respondents in Mexico, Singapore, and Spain believe having a well-paying and steady job is more important than focusing on their spending habits.

Despite the personal anxiety prevalent in the study, some respondents were optimistic about their own country’s outlook. Mexico and Singapore stand out as particularly optimistic, with 74% and 79% of adults, respectively, saying they are optimistic about where their economy is headed. Even with those outliers, only 49% of adults globally are optimistic, while 51% are pessimistic about where the economy is heading. The delta between expert indicators of how a nation’s economy is faring and how its citizens report things are going paints a stark picture.

As governments around the world aim to shake off the “vibecession” and boost economic confidence, understanding these nuanced points of view will be crucial. If personal financial security doesn’t improve, governments should brace themselves for continued economic concern and a wave of retirees who can’t support themselves — an unsustainable future.

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