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Over 70% of Americans feel 'at least OK' financially in Fed poll

Written on Jun 5, 2024

Americans may have a worsening view of the economy, but their personal financial well-being hasn't changed much last year in an annual survey by the Federal Reserve. 

About 72% of adults were "doing at least OK financially" as of October 2023, little changed from 73% in 2022 but down from a 78% high in 2021, according to the central bank's Survey of Household Economics and Decisionmaking. 

The share of Americans who can cover a surprise expense of $400 using cash or equivalent was also little changed from the previous year — about two-thirds. 

The share of adults who said they were worse off financially than a year earlier dropped to 31% from 35% in 2022 — when it reached the highest level since the question was first asked in 2014. 

The Fed survey examines the financial situation of more than 11,000 adults and their families in the US. Since inflation surged to a 40-year high in mid-2021, households have been much more resilient than many economists had anticipated. But even as inflation receded last year, more and more started to struggle from the cumulative rise in costs. 

Inflation continued to be the top financial concern in 2023, with a majority of people saying higher prices had made their financial situation worse.  

The Fed survey also shows a wide divergence among households. While close to half of respondents could cover a $2,000 expense, 18% of adults said the largest emergency cost they could handle right now using only savings was under $100 and 14% said they could afford an expense of $100 to $499. Seventeen percent of adults said they didn't pay all their monthly bills in full in the month before the survey. 

Housing is the single biggest expense in most families' budgets. While almost two-thirds of people own their homes in the U.S., financial constraints led many to rent rather than buy a house in 2023. A majority of renters said they couldn't afford a down payment. And the share of those who were behind on their rent is on the rise — 19% in 2023 compared with 17% in 2022. Meanwhile, the median monthly rent payment rose 10% to $1,100. 

Tight finances likely contributed to some homeowners not having home insurance too. At least 4% of homeowners weren't insured— and the share rises to 13% among those who are mortgage-free and not required to have insurance. The percentage is much higher among lower-income families in the South, where more than 2 in 10 owners making less than $50,000 had no home insurance last year. 

The 2023 report added new data on childcare. At the time of the survey, nearly 3 in 10 parents living with their children under age 13 used paid childcare, spending a median monthly amount of $800 — and $1,100 for those who needed 20 or more hours of help each week. 

Each month, parents typically spend 50% to 70% as much on childcare as on housing, which is usually the largest expense for households. 

Student-loan payments resumed last year for millions of Americans after a hiatus during the pandemic. Overall, 16% of borrowers said that they were behind on their student loan payments in 2023, similar to 2019. 

But again, there were major differences among respondents. Nearly a quarter of borrowers earning less than $25,000 were behind on student-loan payments, compared with just 7% of those making $100,000 or more. Hispanic and Black borrowers reported higher rates of being behind as well. 

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