Two-thirds of Americans say inflation has made their financial situation worse

By Jeffry Bartash

Yet most Americans also say they are doing OK

Nearly two-thirds of Americans say high inflation has made their financial situation worse, especially families with lower incomes, a new Federal Reserve study found.

Some 65% of those polled in the Fed's annual survey of U.S. households said inflation hurt their financial well-being in 2023. And 19% said rising prices made their financial health "much worse."

"Despite the moderating pace of inflation, higher prices continued to be a top financial concern," the Fed said.

The rate of inflation slowed to 3.4% at the end of 2023 from 6.5% at the beginning of the year, but it's still more than double prepandemic levels.

There was some good news in the report. Almost three-quarters of families said they were either "doing OK" or were "living comfortably," the Fed noted.

Seventy-two percent of adults said they fell into one of those categories - basically the same as in 2022, but down from a recent peak of 78% in 2021. Households received generous government stimulus payments in the first few years of the pandemic.

As expected, higher-income households said they were doing the best financially, helped by a rising stock market.

Lower-income families were doing less well, according to Fed. Some 17% of adults said they could not pay all of their bills from the prior month in full because they did not have enough money. In some cases, they did not have enough to eat or skipped needed medical care because of the cost.

Most Americans said they could afford a $400 emergency expense and would likely cover the cost with cash. Thirteen percent said they could not cover the cost by any means.

Although government statistics show that paychecks are now rising faster than inflation, the Fed survey suggested that many Americans don't believe that is the case. Only 33% of adults said they received a raise in 2023.

For the first time, the report asked about child care. Parents said they spent 50% to 70% as much on child care each month as they did on housing, the single biggest expense for most families.

Monthly child-care expenses ranged on average from $800 to $1,100, the Fed said. Parents with children were one of the few groups to say their well-being declined notably from 2022 to 2023.

-Jeffry Bartash

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05-21-24 1148ET

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