The Federal Reserve Board issued its Economic Well-Being of U.S. Households in 2022 report which examines the financial lives of U.S. adults and their families. The report draws from the Fed’s 10th annual Survey of Household Economics and Decisionmaking (SHED) which was conducted in October of last year.
Overall, the report showed that higher prices have negatively affected most households and overall financial well-being declined over the prior year, though workers continued to benefit from a strong labor market.
The report indicated that self-reported financial well-being declined in 2022, in part reflecting ongoing concerns about higher prices. In the fourth quarter of 2022, 73 percent of adults reported either doing OK or living comfortably financially, down 5 percentage points from the previous year and among the lowest levels observed since 2016.
Along with overall financial wellbeing changes, fewer adults reported having money left over after paying their expenses. Fifty-four percent of adults said that their budgets had been affected “a lot” by price increases. Parents living with children under age 18, Black adults, Hispanic adults, and those with a disability were more likely to say that their budgets had been affected “a lot” by higher prices.
“The SHED results provide helpful insights into the economic well-being of Americans,” Fed Board Gov. Michelle Bowman said. “It is important that we continue to refine our understanding of the economic challenges facing U.S. households.”
The report also provided details on the ways people adjusted their financial behaviors in response to higher prices. Common strategies included using less of a product or stopping using it altogether, switching to a cheaper product; or delaying a major purchase. Fifty-one percent of adults reported that they reduced their savings in response to higher prices.
Additionally, the share of adults who reported that they would cover a $400 emergency expense using cash or its equivalent was 63 percent. This was down 5 percentage points from a high in 2021. Thirteen percent of adults said they would be unable to pay the expense by any method, which was slightly higher than in the last survey.