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Even Millionaires Cut Back On Buying Homes, Restaurant Food, Gas Thanks To Surging Inflation

   DailyWire.com
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As the United States economy continues to show signs of a looming recession, the middle and lower classes are by no means the only groups struggling.

CNBC and Spectrem Group’s most recent Millionaire Survey — which polls people with $1 million or more in investable assets — revealed on Thursday that 39% of millionaires under 40 years old aren’t eating out as often because of inflation. Meanwhile, 36% have cut back on vacations, and 22% aren’t driving as much.

“The millennial millionaires are clearly dealing with something they’ve never experienced,” Spectrem Group President George Welper told CNBC. “As a result, they are changing their behaviors and spending plans.”

The survey comes as the Consumer Price Index (CPI) increased 8.6% year-over-year as of May, meaning that inflation hit a fresh four-decade inflation high. Though inflation especially harms low-income and middle-income households — who spend a higher percentage of their income on day-to-day necessities like groceries, gasoline, and rent — 95% of American voters believe that inflation is a “somewhat serious” or “very serious” issue, according to a recent Harvard/Harris poll.

Another concern for respondents was the housing market, with 44% of millionaires under 40 saying: “Higher interest rates have caused them to delay purchasing a home.” However, only 6% of millionaire baby boomers between 57 and 75 said the same.

Indeed, mortgage rates are soaring to their highest levels since 2008, according to a Tuesday report from the Mortgage Bankers Association, which revealed that rates increased for all loan types — including a jump to 5.65% for the benchmark 30-year fixed rate. Through most of the past two years, rates have been below 3% and began their climb to well over 5% in early 2022.

Interest in luxury homes, defined as the top 5% of the market, is quickly declining. Sales fell 18% from February to April 2022 compared to the same period last year, according to a report from Redfin obtained by The Wall Street Journal. A plummeting stock market is likely worsening hesitation among luxury buyers — perhaps pushing them to lower their standards and compete with prospective middle-class homeowners.

There are substantial generational gaps in terms of economic prognoses. While 90% of younger millionaires are “confident” or “somewhat confident” in the Federal Reserve’s ability to manage inflation, 38% of millionaire baby boomers are “not at all confident.”

Research shows that past experiences with high inflation make one warier of current price level increases. Unpredictable prices marked the 1960s and 1970s as the Federal Reserve failed to enforce a consistent monetary policy regime. According to a 2021 paper from the University of Chicago and University of California-Berkeley researchers, the effect of having lived through past inflationary periods can even be seen among members of the Federal Open Market Committee, which handles the Federal Reserve’s monetary policy interventions.

The Dow Jones Industrial Average fell below 30,000 for the first time since late 2020 amid the Federal Reserve’s actions to tighten its monetary stimulus. Earlier this week, the central bank announced that it would hike interest rates by 0.75% in its boldest policy action since 1994. The move follows a rate hike of 0.5% in May — the largest such increase since 2000 — and another 0.25% rate hike from near-zero levels in March.

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