Fed: Economic well-being declined amid high inflation

Self-reported financial well-being was at the lowest levels observed in nearly a decade, with inflation having negatively affected most households, according to the Federal Reserve’s latest Economic Well-Being of U.S. Households report released today. The report found that well-being notably declined in 2022, with 73% of adults doing at least okay financially, down 5 percentage points from 2021. The share of adults who said they were worse off financially than a year earlier rose to 35%, the highest level since the question was first asked in 2014.

More adults experienced spending increases rather than income increases, according to the survey. Forty percent of adults said their family’s monthly spending increased in 2022 compared with the prior year, while 33% said their monthly income increased. While some adults saw both their spending and their income increase, 23% of adults said that their spending had increased but their income had not.

Access to financial services from banks and credit unions remained high, with 94% of adults having a bank account, according to the survey. Use of nontraditional payment methods remained low, with just 3% of adults having used cryptocurrency for financial transactions in 2022 and 12% using buy-now-pay-later services. One area where the economy showed strength was in the labor market, with one-third of adults receiving a raise or promotion in 2022 and 13% of adults asking for a raise or promotion. Among those who asked for a raise in 2022, 70% also said that they received one.