U.S. consumers are feeling the squeeze of record-setting inflation, market volatility and a looming recession – and it's taking a toll. Over half (56%) of Americans say their standard of living is declining, and nearly 4 in 10 (38%) are feeling financially unhealthy, according to a new Personal Capital and Empower survey*, fielded by The Harris Poll.

With a vast majority concerned about rising inflation (85%) and a potential recession (74%) knocking their financial stability, those worries are showing up in consumers' spending, saving and investing actions. Read the full report here.

In uneasy times, Craig Birk, Chief Investment Officer at Personal Capital, advises to take the long view. "It is human nature to compare portfolio values to their all-time high, but a wider lens is usually more constructive. In a choppy market, there are plenty of opportunities to take control of your money. Knowing your net worth puts you in the driver's seat because you need a real-time measure of your financial health to make smart moves."

Bracing for the storm: as worry increases, 73% of people are taking financial action to prepare.

Americans are battening down the hatches by paying off debt more aggressively than they would otherwise (56%); socking away more in short-term (58%) and retirement savings (52%); and exploring alternative housing options (37%). To hedge against inflation, nearly half (49%) say they'll change their risk tolerance/investment approach.

Some 71% say they're cutting back on daily expenses, reining in entertainment (41%), dining out (40%), and travel (40%). But, not so fast when it comes to their favorite things: 33% say they "won't be switching to cheaper brands than I normally buy."

Consumer spending is focused on experiences, with 55% of Millennials saying they spend more time planning for vacations than retirement. 

Despite their worries, many are living it up when it comes to travel – especially Millennials. They're also the generation least likely to cut back on travel in light of inflation (35% versus 40% general population). In May, the average Personal Capital user spent** $1,304 on travel. That's 227% more than the pandemic low of April 2020 at $399 and 28% more than pre-pandemic levels of $1,017 in February 2020.

Cryptocurrency remains a gamble: crypto owners are more concerned about market volatility than those who don't own any (79% vs 68% non-owners).

Nevertheless, they're significantly more confident in their investment portfolios (81% vs 67%). As many investors grapple with how – or whether – to incorporate crypto assets, Millennials (50%) and Gen Z (49%) are disproportionately worried about its impact on their financial health, compared to the general population (33%).

Great reset…or regret? Financial confidence wavers at work.

Over half of Americans (54%) say anxiety about the current environment has impacted their work performance, and 32% are worried about the impact of returning to the office on their finances. More than half (56%) of respondents are opting for a side hustle or another alternative income stream in light of inflation, and 61% of Millennials are concerned about a possible job loss impacting their finances.