Americans have jobs. They are getting raises. And none of that is enough to keep up with the rising cost of living.
The share of American adults who said they were “at least financially well off” dropped sharply last year, from 78% in 2021 to 73%, according to the Federal Reserve’s latest survey of Americans’ financial well-being, released on Monday. -fair. About 35% of Americans said they were doing worse than the year before, up from 20% in 2021 and the highest share in the nine years the question has been asked. Only 19 percent of respondents said they were doing better than the previous year.
The erosion in financial health has been wide-ranging, cutting across racial and ethnic lines, educational categories and income groups.
The data, from the Fed’s Home Economics and Decision Making Survey, echoes other surveys that show Americans feel let down by the economy and their own finances. But it does provide new details on how the economic undercurrents of a strong job market and rising prices are affecting households.
The job market is, by many measures, the strongest in decades, with the unemployment rate hovering near a half-century low, job openings near record highs and workers feeling empowered to demand higher wages. The benefits of this environment are clear in the Fed survey: Respondents said they were more likely to demand and receive raises and promotions than in previous years, and less likely to lose their jobs. Some 33% of respondents said their incomes increased in the past year, up from 30% in 2021.
But those gains were outweighed by rising prices. Only 49% of Americans said they spent less than they earned each month, down from 55% in 2021. Nearly two-thirds said they used less than one product or stopped using it entirely because of inflation. More than half said they saved less.
The drop in general well-being in 2022 was the largest in the survey’s 10-year history, but it in part reflected gains made in 2021, when the federal government was still providing high levels of assistance to many families through the expanded tax credit for children. and other programs. In 2019, before the pandemic, 75% of adults said they were at least well off financially, only modestly above the 2022 figure.
Democratic leaders, including some White House officials, sometimes dismiss surveys of economic sentiment, arguing that more concrete measures of income and employment tell a more optimistic story. Personal income in general has been rising even after adjusting for inflation, although earnings have declined in recent months and wages have risen faster for lower-paid workers.
But on a call with reporters, Fed officials noted that the survey showed declines not only in subjective measures of economic sentiment, but also in more objective measures. Only 63% of respondents said they had cash on hand to cover a $400 emergency expense, for example, down from 68% in 2021.
The survey was based on in-depth interviews with more than 11,000 US households and was conducted in October.
