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Why parents with young children are reporting a dramatic drop in their financial well-being
Parents with younger children saw a significant drop in their reported financial well-being last year, according to a comprehensive annual study of American household finances released by the Federal Reserve last week.
O Home Economics Research and Decision Making found a decline in the percentage of parents living with children under 18 who felt financially secure, falling from 69% in 2022 to 64% in 2023. This is also down from the record high of 75% in 2021.
The current number is now the lowest on record since 2015, Fed survey data shows.
The Fed does not explicitly state the reason for the dramatic decline in sentiment among those who participated in the survey, although it does note that the monthly child care expenses some families face have risen to almost as much as the cost of income.
Experts say this is the product of two key recent events that have destabilized the finances of many American families: the expiration of the pandemic-era expanded child tax credit — which left some families receiving monthly payments of up to $250 per child plus old and US$300 per young child. child – and the end of support for childcare groups.
Both changes started to happen in 2022.
Since the tax credit has expired, according to the Columbia University Center on Poverty and Social Policy“Many families with children have seen a reversal of fortunes… including lower disposable income and increased poverty, food hardship and financial hardship – presenting an ongoing challenge for families across the country.”
Ismael Cid-Martinez, an economist at the Economic Policy Institute, a left-leaning think tank, said the consequences were clear. Fewer parents say they can come up with $400 in an emergency and they report more cases of food insufficiency.
After 2021, Cid-Martinez said, “parents’ savings started to dwindle.”
Another important program for the pandemic provided greater financial support for daycare centers. This support also ended without being reinstated.
With the exception of a few states, most child care organizations have been forced to raise their prices or close.
This became known as “childcare cliff.”
In the case of North Carolina, nearly 1,800 child care programs are projected to close, according to a forecast from the liberal think tank Century Foundation.
Julie Kashen, senior research fellow and director for women’s economic justice at the foundation, said any help from Washington to resolve the issue is now a remote possibility, thanks to resistance from congressional Republicans seeking to slash the federal budget.
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“One lawmaker said supporting child care is like supporting golden retrievers,” Kashen said. “But then the question is always, ‘How are we going to pay for it?’”
‘At least doing well’
The Fed survey found that overall, the financial well-being of most Americans worsened slightly in 2023, with 72% reporting they were “at least doing well” financially — down from 73% in 2022 and the post-pandemic high. of 78% in 2021. The rate has not been this low since 2016.
Inflation continued to be the main complaint among respondents, with the rate of concern about high prices increasing from 33% to 35%. This compares to just 8% who mentioned inflation as a concern in 2016, the last year this question was asked.
The survey continued to show that a significant portion of Americans remain immunized against any financial worries, with 31% answering “none” to the question about the main challenges they face. This represents an increase from 28% in 2022, although down from 53% in 2016.
President Joe Biden recognized inflation as one of voters’ main concerns, calling on retailers to lower their prices. This week, it seemed like Target answered the call when it announced a plan to implement price cuts on 5,000 everyday items.
However, the most recent NBC News poll found that more voters trust donald trump what Biden to deal with inflation and the cost of living – although many economists say that Trump’s proposals to resolve the situation would likely lead to higher prices.
This article was originally published in NBCNews. with