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High inflation made finances worse for 65% of Americans last year
CNN –
Inflation may have slowed last year, but it continued to deal hard blows – some devastating – to Americans’ livelihoods: nearly two-thirds of American adults were worse off because of it, and about 1 in 6 were not. was able to pay all of his monthly bills, new data from the Federal Reserve shows.
The Fed released its U.S. Household Economic Well-Being Report for 2023, examining the financial lives of American adults and their families. The report found that 72% of adults surveyed said they were “fine” financially. This is slightly lower than last year, but well below the 78% high reached in 2021 (and still above the record low of 62% in 2013).
Inflation “worsened” the financial lives of 65% of US families, according to the report. Among them, 19% said it was “much worse”.
The findings were drawn from the Fed’s 11th Annual Survey of Home Economics and Decision Making, which analyzes the economic health of Americans in a variety of areas, including employment, income, banking and credit services, housing, retirement planning, student loans , child care and even Buy Now. , Pay later for usage.
But even at a time when comprehensive economic data highlights a remarkably resilient economy – job growth has been excellent and wage gains have been strong, which has helped fuel spending and keep the economy moving – not everyone feels so optimists. More than three years of high inflation harmed Americans’ wallets and psychesS.
This was especially true in 2022 when inflation in the U.S. reached 9.1%, its highest annual rate in more than 40 years. Last month, annual inflation was 3.4%, according to the Consumer Price Index.
Incomes grew healthily in 2023, but so did spending, the Fed report showed. Monthly budgets remained tight and more than half of adults had no money left after paying expenses.
This was especially true for low-income adults, who reported higher instances of not having enough to eat, not being able to pay their bills in full, and missing out on medical care.
Overall, 17% of adults reported that they were unable to pay all of their bills in full in the month before the survey, which was conducted in October 2023.
“O [Survey of Household Economics and Decisionmaking] provides valuable information about the financial conditions of American families,” Fed Governor Michelle Bowman said in a statement accompanying the report. “This perspective continues to help the Federal Reserve better understand how families are coping with the current economic challenges they face.”
The report showed an improvement in people’s feelings about the performance of the local economy – with 42% saying it was “good” or “excellent”, compared to 38% the previous year. However, that percentage is a far cry from how people felt before the pandemic: In 2019, 63% felt their local economy was in good or excellent health.
Looking at the national economy, the story is similar: people’s perceptions have improved compared to 2022 (22% last year, up from 18%), but remain well below the 50% percentage achieved in 2019.
Tuesday’s report showed similar financial resilience measures to those reported in 2022, with 63% of adults saying they would be able to cover a $400 emergency expense with cash on hand.
Although this percentage is below the recent maximum of 68% reached in 2021, it is well above that observed during the last decade. In 2013, just 50% said they could pay a $400 emergency expense in cash, Fed data shows.
While financial well-being has remained generally unchanged since 2022 for most Americans, Fed researchers highlighted one specific segment that has seen a significant drop: parents living with children under age 18. doing well” fell to 64%, from 69% in 2022 and 75% in 2021.
For those with younger children, child care expenses were considerable in 2023. Out-of-pocket child care expenses represented 50% to 70% of what parents shelled out for their monthly housing payment, according to the report.
Childcare expenses, along with home insurance, food sufficiency and caring responsibilities, were among the new topics discussed in the report.
In terms of home insurance, the report found that adults who are at a higher risk of being financially affected by a natural disaster were less likely to be insured. Nearly 25% of homeowners living in the South and making less than $50,000 a year did not have homeowners insurance, the Fed found.