Fed survey: Americans’ financial well-being improves in 2021

Nearly 8 in 10 U.S. households surveyed in late 2021 said they were “doing OK” or “living comfortably,” according to the Federal Reserve’s annual Report on the Economic Well-Being of U.S. Households released today. The combined 78% was the highest level recorded by the survey, up three points from 2020 and up 16 points since 2013. While the report does not specifically address households’ views of consumer price inflation, the survey was fielded in fall 2021 after consumer prices had risen at year-over-year rates exceeding 5% for several months.

The share of unbanked American adults was virtually unchanged at 6% in 2021 and down from 8% in 2015. The report showed the share of adults considered “fully banked”—that is, who had a bank account and also did not use a number of nonbank financial alternatives—held steady at 81%. The report also showed that 11% of adults with a bank account paid an overdraft fee at some point in the prior year.

The survey also saw households’ savings practices improve in the aggregate. Sixty-eight percent (up 4 points from 2020 and up 18 points from 2013) said they could cover a $400 emergency expense in cash, a benchmark often cited by policymakers. The survey found that 25% of non-retired respondents reported having no retirement savings or pension, down a point from 2020 and marking continued progress from previous years.

The Fed survey asked questions about cryptocurrencies for the first time and found that 12% of adults had held or used crypto in the prior year—with almost all of these using it as an investment vehicle, not a form of payment. Crypto holders tended to be higher-income, with 46% of those using it as an investment earning over $100,000 per year. Ninety-nine percent of crypto investors also had bank accounts, but of those who used crypto for transactions, 13% reported being unbanked.

Also for the first time, the survey covered the growth of “buy now pay later” loans, which 10% of respondents reported using in the prior year. Nearly 8 in 10 BNPL borrowers cited convenience as one reason, while 53% said they used BNPL because they did not want to use a credit card, 51% said it was the only way they could afford the purchase and just under one-fifth said it was the only payment method they had. Among BNPL borrowers, just 15% had been late making a payment in the prior year.

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