The Federal Reserve’s annual survey released in 2023 revealed that the share of Americans who feel they are “doing OK financially” has hit a four-year low, with only 72% of respondents reporting this sentiment. This is a decline from 78% in 2021 and marks the lowest percentage since April 2020. Notably, the share of parents with children who feel financially stable dropped from 69% in 2022 to 64% in 2023. The main financial challenge reported by 35% of respondents was rising prices, with inflation taking a toll on household finances despite wage growth outpacing inflation since early 2023.
Although inflation has subsided from its peak of 9.1% in June 2022, it has been hovering around 3% for nearly a year, leading to a cumulative strain on household finances. Consumer spending has remained resilient despite rising inflation, but recent data suggests that Americans may be spending beyond their means. In March, spending outpaced income growth, indicating a trend of overspending since late 2023. Additionally, while 34% of respondents reported an increase in income over the previous year, 38% stated that they are also spending more, with savings rates declining to 3.2% in March.
As savings have decreased, personal debt has continued to rise, with credit card and auto loan delinquencies surpassing pre-pandemic levels. A New York Fed official noted that these delinquencies indicate worsening financial distress among some households. Federal Reserve Chair Jerome Powell expressed cautious optimism that inflation will continue to decelerate towards the Fed’s target of 2%. He acknowledged progress made while emphasizing that there is still work to be done. The Fed’s survey findings reflect a concerning trend of financial instability among American households, with a growing number of individuals facing increasing debt and dwindling savings.
To address the challenges of inflation and financial distress, CNBC has launched a new online course titled “Become an Effective Communicator: Master Public Speaking.” This course aims to help individuals improve their communication skills, including speaking clearly and confidently, calming nerves, choosing appropriate language, and using body language effectively to make a positive impression. Those interested in enhancing their communication abilities can sign up for the course and use the code EARLYBIRD for a discount. Additionally, individuals can subscribe to CNBC Make It’s newsletter to receive tips and tricks for succeeding in work, managing money, and navigating life effectively. By investing in communication skills and staying informed about financial strategies, individuals can better navigate the challenges posed by inflation and financial uncertainty.
