American households are still penalized by inflation, according to a Fed report

American households are still penalized by inflation, according to a Fed report
American households are still penalized by inflation, according to a Fed report

American households continued to feel penalized by inflation at the end of 2023, even if price pressures eased, the Federal Reserve said on Tuesday. Most Americans said their financial situation had changed little over the past year, while parents reported times had gotten tougher.

About 72% of adults were doing at least well financially in October 2023, according to the Fed’s annual Survey of the Economy and Household Decision Making.

This is down from 78% in 2021 and the lowest rate since 2016, although there was no change from 73% in 2022. The share of parents who are doing at least well financially fell 5 percentage points to 64%, the lowest level since 2015, when data collection began.

Inflation remains the biggest financial concern, the report said. Sixty-five percent of adults said high prices had made their situation worse, even though consumer price inflation fell sharply, from around 9% in June 2022 to less than 4% by the time l The investigation was carried out. And while 34% of those surveyed said their family’s monthly income had increased over the past year, 38% of them said their expenses had also increased.

Some 63% of adults said they could cover a hypothetical emergency expense of $400 using cash or its equivalent, the same percentage as in 2022, but down from a record 68%. reached in 2021.

Last year, it was more difficult than the previous year to cover the costs of renting a home, with 19% of tenants reporting being late with their rent payment at some point during the previous year, up from 17% in 2022. Rental costs, which have proven to be one reason inflation hasn’t fallen as much as Fed policymakers hoped, rose well more than inflation as a whole, with the median monthly rent increasing 10% to $1,100, the survey found.

The survey was carried out among 11,000 people. It was carried out in October 2023. (Reporting by Dan Burns; Editing by Paul Simao)

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