The financial well-being of Americans took a nose dive when inflation peaked late last year, according to federal officials.
A recent survey conducted by the Federal Reserve found that a record number of U.S. adults felt they were worse off financially than the year prior.
The Federal Reserve released its Economic Well-Being of U.S. Households in 2022 report last week, an analysis primarily derived from the annual Survey of Household Economics and Decisionmaking (SHED), which reconstructs a snapshot of the financial lives of respondents through broad questions relating to income, spending habits, savings, debt, and so on.
More than 11,000 adults took the survey last October. Overall, self-reported financial well-being declined in 2022, according to SHED results.
When asked whether they were worse off financially than the year prior, 35% of SHED respondents answered yes, logging the highest share seen since the question was added to the survey in 2014, according to The Wall Street Journal.
Such financial pressure seems to have carried over into 2023, with a survey conducted by CNBC in March revealing that 70% of respondents were feeling financially stressed, as The Dallas Express reported.
According to the SHED survey, fewer adults said they were doing okay financially or living comfortably in 2022 than in the two years prior — dropping to 73% from 78% in 2021 and 75% in 2020.
The survey revealed that inflation — which averaged 8% in 2022 — was the most commonly cited financial burden among respondents.
Approximately 54% of adults reported that higher prices had significantly affected their budgets, with many employing different strategies to cope with the rising cost of living.
Nearly two-thirds of respondents said they stopped or limited their use of certain products. Some switched to cheaper versions.
Just over half of SHED respondents said they resorted to drawing from their savings to make ends meet, 18% sought additional employment, and 8% asked their employer for a raise.
Inflation continues to persist despite some price stabilization, as The Dallas Express reported. In April, the consumer price index rose 0.4%, mainly due to price increases in housing, used cars, and gas.
As The Dallas Express reported, a study by SmartAsset found that Dallas-Fort Worth residents claimed they needed about $11,000 more in after-tax annual income to live comfortably in 2023 than they did the prior year.
SHED respondents were also provided with various hypothetical scenarios designed to test the resilience of their finances in the event of an emergency.
For instance, when asked whether they could cover a $400 emergency expense, 63% of those surveyed said they could — 5% fewer than the year before.
As The Dallas Express reported, this financial strain might tighten for those with federal student loans. A three-year pause granted to borrowers during the COVID-19 pandemic is set to end, with an estimated 44 million people slated to resume payments soon. As of April 1, 2023, the nation’s outstanding federal student loan balance was $1.635 trillion.