Household financial health is in decline, with a “rapid deterioration” in financial health for some key groups, according to a new report issued Wednesday by the federal consumer financial protection agency.
In its 2022 Making Ends Meet report, which aims to cover the financial health of American households, the Consumer Financial Protection Bureau (CFPB) data from early 2022 shows a decline in several key measures. It singled out worsening financial health conditions for Hispanic consumers, consumers under the age of 40, and low-income renters. The report also asserted that more than 37% of households were unable to cover expenses for longer than one month if they lost their main source of income.
“Many consumers are not financially prepared for a disruption to their main source of income, even as unemployment remains low,” the report states.
The report also, the bureau said, finds that in 2022, one in eight households also experienced lost income from unemployment or reduction in work hours, and roughly one-third of households experienced a major unexpected expense, including vehicle repair, unexpected medical expense, or a household repair.
The report also found in 2022:
- Consumers faced frequent income uncertainties, as income variability increased sharply from 2021 to 2022. “The increase was particularly large for Hispanic consumers and consumers under age 40,” the report states. “Also, while racial and ethnic groups applied for credit at similar rates, Black and Hispanic consumers were more likely to be turned down or not receive as much credit as they requested. Black and Hispanic consumers were also much less likely to apply for credit in the first place because they believed they would be turned down.
- At least one rental payment in the previous year was missed by 31% of renters last year. Approximately 8% were not current on their rent as of February 2022. Yet only 6% of renters had received rent payment or flexibility since the pandemic began.
- Nearly 18% of student loan borrowers have annual incomes under $125,000 and loan balances under $10,000. Under the Department of Education’s proposal for student debt relief (now on hold via court orders), borrowers with federal student loans who meet these criteria would have their entire student debt balance forgiven.
CFPB Report Finds Household Financial Health is Declining after Several Years of Increased Savings