Latest Federal Reserve Economic Well-Being Report Finds Self-Reported Financial Well-Being Declined in 2022
Last month, the Federal Reserve issued its “Economic Well-Being of U.S. Households in 2022” report, which shows that higher prices have negatively impacted the general well-being of most households, but workers have continued to benefit from a strong labor market. The report pulls data from the Board’s tenth annual Survey of Household Economics and Decisionmaking (SHED), which was conducted in October 2022.
In the fourth quarter of 2022, 73 percent of U.S. adults reported either doing okay or living comfortably financially, which was down by 5 percent from the previous year and among the lowest levels seen since 2016. 54 percent of adults said their budgets were affected “a lot” by higher prices. Hispanic adults, Black adults, and those with a disability were the most likely to report that their budgets were affected “a lot” by price increases.
“The SHED results provide helpful insights into the economic well-being of Americans,” said Michelle W. Bowman, Fed Board Governor. “It is important that we continue to refine our understanding of the economic challenges facing U.S. households.”
Adults adjusted their financial behaviors in response to raised prices by using less of a product or stopping using it completely, changing to a cheaper product, or delaying a large purchase. 51 percent of adults said they reduced their savings in response to price increases.
The report found that 63 percent of adults would cover a $400 emergency expense using cash or its equivalent, which was down 5 percentage points from a high in 2021. 13 percent said they would not be able to pay the expense by any method, which was higher than in the last survey.
Alternatively, the share of workers who received a raise, asked for a raise, or voluntarily quit a job increased since 2021, and the share who lost a job declined. 33 percent of adults said they got a raise or promotion in the last year, up 3 percent from 2021.