Higher prices continued to bedevil households in 2023, pretty much like in 2022, Fed report contends

Higher prices remained a challenge for most households in 2023, like what they faced in 2022, but workers continued to benefit from a strong labor market, according to a report issued Tuesday by the Federal Reserve.

In its Economic Well-Being of U.S. Households in 2023, the Fed said overall financial well-being in 2023 was nearly unchanged from the previous year. More specifically, during 2023, according to the report:

  • 72% of adults reported either doing okay or living comfortably financially, similar to the 73% seen in 2022 but down 6 points from the recent high of 78% in 2021.
  • Despite the moderating pace of inflation, higher prices continued to be a top financial concern, with 65% of adults saying that changes in the prices they paid compared with the prior year had made their financial situation worse, including 19% who said price changes made their financial situation much worse.
  • Some groups continued to experience financial stress at higher rates than others. Low-income adults were more likely to face material hardships, including not paying all bills in full, sometimes or often not having enough to eat, and skipping medical care because of cost.
  • 17% of adults said they did not pay all their bills in full in the month prior to the survey.

The report uses data from the agency’s annual Survey of Household Economics and Decisionmaking (SHED), which was fielded in October of last year. According to the Fed, the SHED analyzes topics including financial well-being, income, employment, expenses, banking and credit, housing, higher education and student loans, and retirement and investments.

In other areas, the report found that financial resiliency, including preparedness for emergency expenses and monthly saving, was consistent with the 2022 report.

“As in the prior year, 63% of adults said they would cover a $400 emergency expense using cash or its equivalent and 13% would be unable to pay the expense by any means,” the report states. “48% of adults said that they had money left over after paying their expenses in the month prior to the survey, similar to 2022 but below 2021 and pre-pandemic levels.”

Federal Reserve Board issues Economic Well-Being of U.S. Households in 2023 report