The Blubber

Americans might have a worsening view of the economy, but their personal financial well-being hasn't changed much last year, according to an annual survey by the Federal Reserve.

About 72% of adults were "doing at least OK financially" as of October 2023, slightly down from 73% in 2022 and from a high of 78% in 2021, according to the central bank’s Survey of Household Economics and Decisionmaking, published Tuesday.

The share of Americans who can cover a surprise expense of $400 using cash or its equivalent remained about two-thirds, similar to the previous year.

The share of adults who said they were worse off financially than a year earlier dropped to 31% from 35% in 2022, when it reached the highest level since the question was first asked in 2014.

The Fed survey examines the financial situation of more than 11,000 adults and their families in the US. Despite inflation surging to a 40-year high in mid-2021, households have been more resilient than many economists had anticipated. However, even as inflation receded last year, more people began to struggle with the cumulative rise in costs.

Inflation continued to be the top financial concern in 2023, with a majority of people saying higher prices had worsened their financial situation. The cumulative rise in the cost of living in recent years has been a key factor in voters giving Donald Trump an edge over President Joe Biden on the economy in polls ahead of the November presidential election.

The Fed survey also reveals significant differences among households. While nearly half of respondents could cover a $2,000 expense, 18% of adults said the largest emergency cost they could handle right now using only savings was under $100, and 14% said they could afford an expense of $100 to $499. Seventeen percent of adults said they didn’t pay all their monthly bills in full in the month before the survey.

Housing is the single biggest expense in most families’ budgets. While almost two-thirds of people own their homes in the US, financial constraints led many to rent rather than buy a house in 2023. A majority of renters said they couldn’t afford a down payment, and the share of those who were behind on their rent increased to 19% in 2023 compared with 17% in 2022. Meanwhile, the median monthly rent payment rose 10% to $1,100.

Tight finances likely contributed to some homeowners not having home insurance. At least 4% of homeowners weren’t insured, with the share rising to 13% among those who are mortgage-free and not required to have insurance. The percentage is much higher among lower-income families in the South, where more than 2 in 10 owners making less than $50,000 had no home insurance last year.

The 2023 report also included new data on childcare. At the time of the survey, nearly 3 in 10 parents living with their children under age 13 used paid childcare, spending a median monthly amount of $800 — and $1,100 for those who needed 20 or more hours of help each week.