The Federal Reserve reported that in late 2023, US households continued to feel the impact of inflation even as price pressures began to ease. Most Americans reported that their financial situation had not changed significantly in the past year, with parents indicating that times had gotten harder. About 72% of adults were doing at least OK financially, which was down from 78% in 2021 and the lowest rate since 2016. The share of parents doing at least OK financially dropped to 64%, the lowest level since data collection began in 2015.
Despite the decrease in overall inflation, it remained the top financial concern for Americans, according to the report. Sixty-five percent of adults said high prices had worsened their financial situation, even though consumer inflation had fallen from around 9% in June 2022 to below 4%. While 34% said their family’s monthly income had increased in the past year, 38% said their spending had also risen. Additionally, 63% of adults said they could cover a hypothetical $400 emergency expense using cash or its equivalent, the same as in the previous year but down from a record high of 68% in 2021.
The survey from the Federal Reserve also revealed that covering rental housing costs was a greater challenge in 2023 compared to the year before. Nineteen percent of renters reported being behind in rent at some point in the prior year, an increase from 17% in 2022. Rental costs, which have contributed to the ongoing inflation challenges, increased significantly more than inflation overall. The median monthly rent rose 10% to $1,100, further adding to financial pressures on households.
The Federal Reserve’s survey on household economics and decision-making included responses from 11,000 people and was conducted in October of 2023. Despite the overall decrease in inflation, many Americans continued to face financial challenges, with concerns about rising prices and rental costs impacting their ability to manage their finances. The decrease in the percentage of adults and parents doing at least OK financially highlighted the ongoing financial strain experienced by many households in the US. The survey also pointed to the need for continued monitoring and support to address the economic repercussions of inflation and rising costs on American families.
