US households still pinched by inflation, Fed report says
US HOUSEHOLDS continued to feel pinched by inflation in late 2023 even as price pressures ebbed, the Federal Reserve reported on Tuesday (May 21), with most Americans saying their financial situation had changed little in the last year, while parents reported times had gotten harder.
About 72 per cent of adults were doing at least okay financially as of October 2023, the Fed’s annual survey on household economics and decision-making showed.
That was down from 78 per cent in 2021 and the lowest rate since 2016, though little changed from 73 per cent in 2022. The share of parents doing at least okay financially dropped five percentage points to 64 per cent, the lowest level since 2015 when data collection began.
Inflation remained the top financial concern, the report said. Sixty-five per cent of adults said high prices had made their situations worse, even though consumer inflation fell sharply from around 9 per cent in June 2022 to below 4 per cent by the time the survey was taken. And while 34 per cent said their family’s monthly income had risen in the past year, 38 per cent said their spending had also increased.
Some 63 per cent per cent of adults said they could cover a hypothetical US$400 emergency expense using cash or its equivalent, the same as in 2022 but down from a record high of 68 per cent in 2021.
Covering rental housing costs was a greater challenge last year than in the year before, with 19 per cent of renters saying they had been behind in the rent at some point in the prior year, up from 17 per cent in 2022.
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Rental costs, which have proven to be among the reasons inflation has not eased as much as Fed policymakers had hoped, were up far more than inflation overall, with the median monthly rent rising 10 per cent to US$1,100, the survey said.
The survey included responses from 11,000 people. It was conducted in October of 2023. REUTERS
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