Financial well-being of Americans remains unchanged, Fed report says

The financial well-being of Americans remained unchanged last year, according to a report from the Federal Reserve Board.

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The Fed’s annual Economic Well-Being of U.S. Households report said that higher prices remained a challenge for most households and workers continued to benefit from a strong labor market.

The report found that in 2023, 72 percent of adults reported either doing okay or living comfortably financially, similar to the 73 percent seen in 2022. This, however, was down 6 percentage points from the recent high of 78 percent in 2021.

Despite inflation rates dropping, higher prices continued to be a top financial concern as 65 percent said that changes in the prices compared with the prior year had made their financial situation worse. Of that percentage, 19 percent said price changes made their financial situation much worse.

The report draws from the board’s 11th annual Survey of Household Economics and Decision making (SHED), which was done in October 2023. It analyzes topics including financial well-being, income, employment, expenses, banking and credit, housing, higher education and student loans, and retirement and investments.

“The SHED provides valuable insight into the financial conditions of American households,” Federal Reserve Board Governor Michelle Bowman said. “This perspective continues to help the Federal Reserve better understand how families are coping with the ongoing economic challenges they face.”

Some groups, including low-income adults, continued to experience financial stress at higher rates than others. In particular, they were more likely to face material hardships, including not paying all bills in full, sometimes or often not having enough to eat, and skipping medical care because of cost. Further, 17 percent said they did not pay all their bills in full in the month prior to the survey.

Measures of financial resiliency, including preparedness for emergency expenses and monthly saving, were on par with the 2022 report. Specifically, 63 percent said they would be able to cover a $400 emergency expense using cash or its equivalent and 13 percent would be unable to pay the expense by any means. Also, 48 percent said that they had money left over after paying their expenses in the month prior to the survey.

In addition, the share of adults who received a raise (33 percent) and asked for a raise (13 percent) remained unchanged from 2022. These measures remained above their 2021 levels.

It also found that childcare was a significant cost in family budgets, as parents using paid childcare typically spent 50 to 70 percent as much per month on childcare as they did on their housing payment.