On Monday, the Federal Reserve reported that U.S. households’ sense of financial security has eroded because of the inflation wave, which remains elevated and crested at a 40 year high last year. According to other sources, they have delayed purchasing goods or swapped to cheaper options, even reducing their savings options to meet their needs, and they feel less secure about retirement.
The Fed said the people who stated they were doing “at least okay financially” in 2022 in the survey, which represents inflation’s corrosive effect on Americans’ economic confidence, dropped by 5 percentage points, i.e., to 73%. It was the highest since the system was launched, which is a decade old, and it stood at a record high last year.
The percentage points were shot up for the people who stated they were worse off by 35%, and it is the highest since the feds started questioning about it since 2014. “The Fed launched the “Survey of Household Economics and Decisionmaking” in 2013.“
“And for retirement savings, those who consider it “on track” dropped to 31%, and the figure was from those who are not retired yet. In 2021, it was up to 40%.“
The 2024 presidential campaigns are in their early stages, and surveys also suggested that Americans’ negative attitudes about their individual financial situations permeated their perceptions of the country’s economy.
“In 2019, 50% of respondents rated their national economy as “good” or “excellent.”” While the stats are down to 18% as of now. But the unemployment rate has been low, it has been below 4% since January 2022.
Inflation
“Over 11,775 people were part of the survey, which concluded in October.” As the economy was reopened from the pandemic era and there were fewer to no restrictions on the public and commercial sectors, inflation came out as the key risk for the U.S. in 2021.
“The consumer price index measures annual inflation, and it peaked at 9.1% last summer.” It remains elevated at 4.9% now, which is the highest since the early 1980s. The Feds are aggressively hiking interest rates, and they have said they will do whatever is possible to overcome inflation.
The parents of children under 18 stated that their budget is “a lot” affected by the increased price, and the count of people affected goes to 54%, including parents and adults. Mostly black and latin Americans were likely to report about the impact of inflation.
In fact, one third of the households mentioned that inflation is one of the biggest financial challenges, as it has hiked four times since 2016.
A question was asked to gauge the ability of people to handle moderate financial emergencies, and “people stated that they had the ability to cover a $400 bill with cash or by equivalent means like a credit card,” which would be expected to pay full payment in the next statement cycle. While 63% said they would pay with cash, compared to 68% in 2021.
More people asked for or received a pay raise or promotion last year, according to the survey’s measures of household incomes and respondents’ sense of the job market.
