TAMPA, Fla. (WFLA) — A Florida Atlantic University survey reported American Hispanic households are feeling less confident in the economy as the new year starts and record levels of inflation continue.
The study measures consumer confidence, or how comfortable consumers are with buying things like houses, cars and their financial situations more generally.
The decline was a continuation of a yearlong trend through 2021, with economic factors continuing to drive weakening consumer confidence among Hispanic families in the U.S.
From the first quarter to fourth, Hispanic Consumer confidence, measured on the university’s Hispanic Consumer Sentiment Index, fell from 92.0 to 86.7. From Q3 to Q4, HCSI dropped the largest amount, showing buyer confidence dropped about four points on the scale, from 90.5 in 2021’s third quarter to 86.7 as the year ended.
FAU’s study found the majority of Hispanics are less optimistic as 2022 kicks off, mainly due to inflation stresses.
“Inflation is hurting Americans’ wallets as it hits a 40-year high in the United States, but certain minority groups like Hispanics are feeling it the most,” the study said. “A report from Bank of America shows that households without college degrees, African Americans, Hispanics and those living in rural areas have been spending more of their post-tax income on goods and services that have seen the most price inflation such as energy, food, cars, and household items.”
It’s an example of how inflation is making American dollars have shorter reach, while prices continue to rise with no end in sight. According to the survey, African American households and Hispanic households spent 7.1% of their after-tax monthly income on energy, while other demographics such as white or Asian spent 5.4% on average.
While the gap between demographics was smaller on food purchases, African American and Hispanic households still spent more than other demographics, spending 12.5% of their income versus the 11.1% everyone else spends, according to the survey.
In terms of spending, it’s a problem echoed in how much of their incomes American households spend proportionally. National data on mortgage applications from Zillow showed fewer minority families were approved for mortgages. Their survey data showed rejection rates as much as 4% to 7% higher among Hispanic and African American households compared to white households.
Housing cost burdens are also higher for these demographics, according to another Zillow study. African American and Hispanic households spend more of their monthly pay on rent than their white or Asian neighbors.
The lessened impact of a dollar, for Hispanic households, remained a driver for the lower confidence in the national economy. As of the 2020 Census, the U.S. had a Hispanic population making up 18.5%, making it the largest minority population across the country. That means for almost 20% of the country, choices about how to spend money was shifting.
“Hispanics between 18-34 year old (71%) and those between 35-54 year old (52%) are more optimistic about their current financial situation than those above 55 years old (46%),” the survey found. Still, only 59% of Hispanics thought they were doing better when it comes to money, compared to the 62% in 2020. The survey also found that fewer Hispanics feel they’ll be better off over the next year compared to the last quarter.
The study found fewer Hispanics thought they were doing better financially now than a year ago, though there is a generational gap when it comes to shifting attitudes.
“In the fourth quarter, 70% of Hispanics said they expect to be better off financially in the next year compared to 78% in the third quarter,” the survey reported, though it noted that Hispanic women are more optimistic than men, when it comes to financial confidence.
Across the Hispanic demographic, the FAU study found that younger buyers feel more confident about buying “big ticket items” like cars and houses, with more Hispanics believing it is a good time to purchase now than in the last quarter.
The weakened confidence for consumers in the early part of 2022 isn’t isolated to just Hispanic buyers. A University of Michigan study found a similar sentiment echoed among the general population, though the drop in confidence was less severe. While Hispanic confidence had dropped 4 points, the general population’s confidence score only dropped 2.9.
Heading into the bulk of 2022, with Hispanic consumers feeling less financially safe, it means almost one in five consumers are questioning how to spend their hard-earned cash.
“Inflation adds to the financial strain that the COVID-19 pandemic has already caused,” said Monica Escaleras, Ph.D., director of FAU BEPI. “Inflation is hurting Americans’ wallets as it hits a 40-year high in the United States, but certain demographic groups like Hispanics are feeling it the most.”
While the current HCSI is lower than in 2020, according to FAU, the lack of Hispanic confidence in the short and long-term economy means the shadow of inflation continues to impact recovery.