Despite a potential slowdown in inflation in the United States last year, high inflation continues to bring economic hardships to many Americans. According to the latest data from the Federal Reserve, 65% of American adults have seen their financial situations worsen due to this, with 17% unable to pay all their monthly bills.
The Federal Reserve released the “2023 U.S. Household Economic Well-being Report” on Tuesday (21st). The report is based on surveys of the economic lives of American adults and their families, covering areas such as employment, income, banking and credit, housing, retirement plans, student loans, child care, and even “buy now, pay later” arrangements.
The results of the survey show that long-term inflation has caused the financial situations of 65% of American households to “deteriorate,” with 19% of families stating that their financial situations have become “worse” due to rising prices.
While 34% of respondents stated that their household’s monthly income had increased over the past year, 38% said their expenses had also risen.
72% of surveyed adults stated that as of October 2023, their financial situation was “reasonable,” but this is significantly lower than the 78% in 2021 and the lowest level since 2016. This figure is even lower among parents. The proportion of parents whose financial situation is at least “reasonable” has dropped by 5 percentage points to 64%, the lowest level since the survey began in 2015.
Although the inflation rate has significantly dropped from its peak of 9.1% in June 2022, it still remains well above the Federal Reserve’s 2% target. Furthermore, prices have skyrocketed by an astounding 19.4% since the inflation crisis erupted in January 2021.
High inflation has placed significant economic pressure on the majority of American households, forcing them to pay more for daily necessities such as food and rent. According to the Consumer Price Index, the annual inflation rate stood at 3.4% until last month.
According to calculations by Fox Business Channel, grocery prices have risen by over 21% since early 2021, while housing costs have increased by 18.37%. At the same time, energy prices have surged by 38.4%.
The impact of price hikes is particularly severe for low-income Americans, as they often have to allocate more of their already tight budgets towards purchasing essential goods, resulting in lower flexibility for saving. The Federal Reserve report indicates that over half of adults state that they have no money left after covering their monthly fixed expenses.
Prior to the survey deadline, 17% of adults surveyed stated that they were unable to fully pay all their bills. The report also reveals that 63% of adults said they could pay for a $400 emergency expense with cash on hand.
Due to persistent high inflation, a typical American household needed to fork out an extra $227 per month in March to purchase the same goods and services as a year ago. Compared to the same period two years ago, Americans were paying an additional $784 per month, and $1,069 more than three years ago.