A survey by the U.S. Federal Reserve shows that American household financial well-being “declined markedly” in 2022. The share of adults who said they were worse off financially than a year earlier rose to “the highest level since the question was first asked in 2014,” according to the U.S. central bank.
American Financial Well-Being ‘Declined Markedly’
The Federal Reserve Board released the results of its 10th annual Survey of Household Economics and Decisionmaking (SHED) Monday. The survey measures the economic well-being of U.S. households and identifies potential risks to their finances. It was conducted in October last year with the participation of more than 11,000 adults.
In its report highlighting the survey’s key findings, the Fed wrote:
Overall, financial well-being declined markedly over the prior year … The share of adults who said they were worse off financially than a year earlier rose to 35 percent, the highest level since the question was first asked in 2014.
“The 2022 survey found that self-reported financial well-being was among the lowest levels observed since 2016,” the Fed continued. “It also shows that higher prices have negatively affected most households, though workers continued to experience a strong labor market.”
A higher percentage of surveyed adults reported an increase in their spending compared to their income. Specifically, 43% of respondents stated that their family’s monthly spending had risen from the previous year, while 33% noted an increase in their income.
Meanwhile, 63% of adults stated that they would cover a hypothetical $400 emergency expense exclusively using cash or its equivalent, down from 68% in the previous year. However, “when asked for the largest expense they could cover using only savings, rather than how they would pay a small emergency expense,” 18% said “the largest expense they could cover with savings was under $100” and an additional 14% said the largest expense they could cover was “between $100 and $499.”
Regarding how inflation affected American well-being, the Fed described:
Inflation affected people’s spending and saving choices in several different ways. Nearly two-thirds of adults stopped using a product or used less because of inflation, 64 percent switched to a cheaper product, and just over one-half (51 percent) reduced their savings in response to higher prices.
The survey further found that 94% had a bank account but the “Use of relatively new financial services like cryptocurrency for transactions and Buy Now, Pay Later (BNPL) remained low compared with traditional payment and credit methods.” According to the survey: “Three percent of adults used cryptocurrency for financial transactions and 12 percent used BNPL in the prior year.”
What do you think about this Fed survey? Let us know in the comments section below.
Source and More information: Fed Survey: US Household Financial Well-Being ‘Declined Markedly’ in 2022
Leave a Reply