Forget the lavish Christmas presents and bottle of bubbly for New Year’s Eve. With the financial news cycle almost wholly fixated on the fiscal cliff debate, consumers are battening down the hatches for a financial storm in the new year.
According to a new survey by BankRate, 33% of consumers have cut back on their spending because of fiscal cliff fears. No wonder, almost half of the American public thinks no deal will be reached, at which point drastic spending cuts and higher taxes will start.
People who earn less than $30,000 are more likely to have cut back than higher earners. Though most of the fiscal cliff talk centers around taxing high earners more–we’re talking $400,000 and up–low earners might fear having their social programs like food stamps and welfare cut.
Another facet of the survey doesn’t bode well for the fiscal cliff talks. When asked about their net worth, job security and overall financial picture, Democrats are more likely to view their situation as improved. Republicans, however, aren’t feeling so great about the past year. It seems that when it comes to your net worth, perception is reality. (If they took a look in their Money Center, they would know how their net worth had actually changed over the past year.)
With the Republican and Democratic bases differing not only on how to improve the economy, but also whether the economy has improved on a meta and personal level, elected officials will have their work cut out for them coming to a compromise on taxes and social program spending.