WASHINGTON–Higher prices have negatively affected most households and overall financial well-being declined during 2022, though workers continued to benefit from a strong labor market, according to the Federal Reserve’s new “Economic Well-Being of U.S. Households in 2022 report.”
The report draws from the Fed’s tenth annual Survey of Household Economics and Decisionmaking, or SHED, which was conducted in October of 2022. The Fed noted the report discusses findings related to financial well-being, income, expenses, employment, banking and credit, housing, retirement and investments, and higher education and student loans.
“The report indicates that self-reported financial well-being declined in 2022, in part reflecting ongoing concerns about higher prices,” the Federal Reserve said. “In the fourth quarter of 2022, 73% of adults reported either doing okay or living comfortably financially, down five percentage points from the previous year and among the lowest levels observed since 2016.
Less Money left Over
Consistent with these changes in overall financial well-being, the Fed said the report found fewer adults reported having money left over after paying their expenses. Fifty-four percent of adults said that their budgets had been affected "a lot" by price increases. Parents living with children under age 18, Black adults, Hispanic adults, and those with a disability were more likely to say that their budgets had been affected "a lot" by higher prices, according to the Fed.
"The SHED results provide helpful insights into the economic well-being of Americans," said Federal Reserve Board Gov. Michelle W. Bowman. "It is important that we continue to refine our understanding of the economic challenges facing U.S. households."
Additional Findings
The report also provides details on how people adjusted their financial behaviors in response to higher prices. According to the Fed, those include:
- Common strategies were using less of a product or stopping using it altogether, switching to a cheaper product; or delaying a major purchase. Fifty-one percent of adults reported that they reduced their savings in response to higher prices.
- Indicators of workers' opportunities for new positions and pay increases strengthened relative to 2021. The share who received a raise, asked for a raise, or voluntarily left a job increased over the prior year, while the share who lost a job decreased. For example, 33% of adults said they received a raise or promotion in the prior year, up three percentage points from 2021, the Fed said.
- The Fed said the share of adults who reported that they would cover a $400 emergency expense using cash or its equivalent was 63%. This was down five percentage points from a high in 2021. Thirteen percent of adults said they would be unable to pay the expense by any method, which was slightly higher than in the last survey.
About the Survey
The survey included more than 11,000 adult respondents.
The report, fact sheet, downloadable data, data visualizations, and a video summarizing the survey's findings are found here
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