Americans’ fiscal confidence fell for the third straight month in January despite the month’s unexpectedly strong job growth as voters across party lines grew increasingly jittery regarding the $31 trillion and rising national debt.
The mixed signals could complicate the prospects for Americans’ charitable giving in the near and long term as a divided Congress and White House begin grappling over raising the national debt ceiling. Inflation and the likelihood of further interest rate hikes only add to the uncertainty.
But a consensus appears to be emerging among the 84% of voters who agree on the need to bridge political divides and begin reining in a national debt that computes to just under $94,000 for every adult and child in America, said the head of the fiscal policy foundation that commissioned the survey.
“With interest on the debt rising to more than $1 billion a day, voters know our fiscal condition is simply not sustainable,” said Michael A. Peterson, CEO of the Peter G. Peterson Foundation. “Instead of investing in the future, we’re stuck paying for the past and leaving an enormous burden on the next generation.”
The monthly survey of fiscal confidence, which is modeled after the Consumer Confidence Index, was done late last month via an online poll of 1,000 registered voters by the Global Strategy Group and North Star Opinion Research.
The results showed Americans’ fiscal confidence falling to 40 in January – down from 44 in November and 43 in December – on a scale of 0 to 200 in which 100 represents a neutral midpoint. The poll showed 77% of Democrats, 81% of independents, and 89% of Republicans agreed that the debt should be a top priority for the president and Congress.
How the debt concerns will impact charitable giving remains even harder to gauge given the additional uncertainty of inflation, which the Federal Reserve has spent the past year trying to tame via interest rate hikes including its quarter point hike last Wednesday.
“Americans give when they feel economically and financially secure, and we have some very positive indicators and unemployment (3.4%) which remains quite low,” said Una Osili, a Ph.D. economist and associate dean at Indiana University’s Lilly Family School of Philanthropy. “At the same time, we have other signals from a volatile stock market and corporate profits that have been more mixed,” she said.
The addition of 517,000 jobs in January and a labor shortage that kept hiring demand strong even amid a rash of tech layoffs, coupled with the International Monetary Fund’s upgraded economic outlook for 2023, could ease Americans’ fear of a recession, she suggested. Fears of a prolonged standoff over the debt ceiling could reverberate negatively among federal employees and others who depend on the government for things like Social Security benefits, Medicare payments, and even tax refunds.
“Where there is volatility and uncertainty, that affects many households and their ability to make charitable commitments,” Osili said. “This is why the debt ceiling is so important.” Raising the debt ceiling won’t necessarily ease the long-term fears of younger Americans who face being saddled with crushing interest rate payments on the debt, which could impact their ability to give. “Americans do want their lawmakers to address this issue, which unfortunately is quite difficult in an era of divided government,” Osili said.
Details of the fiscal confidence poll can be viewed on the Peterson Foundation website at www.pgpf.org.
