Inflation is coming back down to earth, hitting its lowest level in three years, dropping to 2.9%* in July. Despite the dip, some 78% of Americans are using more of their budget on essential items, according to new Empower research.

Almost half (45%) of people notice a change in quality of items they’ve been buying for years — 79% say there are fewer chips in the bag, and 54% say that chocolate costs more, but doesn’t taste as good. Price increases can influence loyalty, too: Around 75% of Americans say it turns them off from a brand, and many are switching over to private label brands (77%).

Still, hopes remain high, with 28% of people optimistic that prices will fall before the end of this year.

— The Editors 

⛏️ Ground-breaking price drops: A proposed $25 billion* merger of supermarket brands Kroger and Albertsons includes a planned $1 billion in grocery price cuts that could be welcome news for consumers. Food accounts for 11.2% of the average family’s household budget, and 80% of Americans say they’ve felt the impact of foodflation in the past year.

🔃 Ups and downs: According to Gallup research, 7 in 10 Americans* believe the economy is “getting worse,” while a quarter (24%) say it is “getting better.” Empower data shows nearly half of Americans say they have less disposable income (47%). A third feel they have the opportunity to grow financially by paying down debt (33%) and investing (17%). 

👜 Tote-ally trendy: Canvas tote bags have emerged as eco-friendly, down-to-earth accessories that also function as expressions of personal identity. In place of monogramming L.L. Bean’s 80-year-old Boat and Tote, fans started personalizing with cheeky phrases, and sales spiked 30%.* Trader Joe’s $2.99* mini version went viral and sold for nearly $100 on eBay. Lands’ End is inviting customers to trade in a bag from any other brand to get two full-size tote bags, valued at around $80, for $1.

🚗 Driving forces: According to Empower research, the average car payment for Americans is $451.89, and nearly a third of drivers (29%) say it’s one of their biggest expenses. The majority of drivers (57%) are holding onto their cars longer, likely due to the increasing annual expense of car ownership, up from $10,728* in 2022 to $12,182. Prices for used cars are on the decline, falling 10.9%* year-over-year in July.

Counting on cash

According to Empower data, more than half of Americans (52%) say “cash is king,” and a quarter (27%) carry it with them every day. Nearly a third (32%) generally keep at least $100 in cash on hand.

The median cash balance for users of the Empower Personal Dashboard™ as of July 2024 is $71,255, making up more than 27% of users' overall portfolio allocation. That's an increase of 15% in cash holdings over the same time period last year ($65,563 in 2023). Empower research shows that while 48% prefer to invest in the stock market, 29% say they prefer to keep all their money in cash.

More than 2 in 5 Gen Zers use digital payment platforms more often than cash (41%), compared to 27% overall. Nearly a third of Americans (29%) are cashing in on using rewards program points every month, and a quarter swipe their credit card daily to pay for something (24%).

Tech goes back to basics

Gen Z adults and Millennials are embracing the idea of leading low-tech lifestyles. More than 2 in 5 (42%*) say they’re interested in devices that do not include advanced digital features like social media and internet connected TVs. In fact, the number 1 feature* people want from their smartphones is pretty down to earth: A better battery life.

Old-school technology with simplified capabilities has been gaining traction in the last few years. Nokia manufacturer Human Mobile Devices doubled its flip phone sales* year over year in 2023 and is projecting higher numbers in 2024.

Even with the resurging adoration for flip phones, there may be a flipside to smart device use: Financial responsibility. Empower research shows Americans spend roughly 2.5 hours a day “dreamscrolling” things they’d like to own one day, and 71% say the practice motivates them to reach financial goals.

Going up: Gap years

Rather than waiting until age 60 or 70, some Gen Zers are taking “mini-retirements”* — periodic career sabbaticals to focus on travel, passion projects, or simply decompress. Empower research shows travel (41%) and hobbies (35%) are two of the top activities Americans are most interested in pursuing in retirement.

While 18 – 25-year-olds are the most likely age group to take a gap year, about one-third* of people taking these career breaks are over the age of 30.

Exploration, self-reflection, and rejuvenation may make employees even stronger candidates upon return to the workforce, but taking time off could mean missing opportunities to save for actual retirement. Adopting habits of excellent retirement savers may be a helpful way to stay on track.

Empower “Cash is King” study, 2024.