A growing number of Americans say they are struggling with finances, according to a new Federal Reserve Bank study that shows the blow to US households from rising inflation. As of October last year, approximately 73% of adults say they are making ends meet financially, but that percentage is down 5 percentage points from last year. At the same time, this is the lowest percentage since 2016, as noted in the review of the Central Bank published yesterday (survey of households and decision-making). This particular study looks at the financial situation of over 11,000 adults and their families. Inflation surged to a 40-year high in mid-2021, eating into American incomes to levels not seen since the 1980s. Since then, inflation has declined but remains above pre-pandemic levels.

According to the Fed, “Overall, the survey shows that higher prices have negatively affected the largest number of households, and the overall economic situation has worsened compared to the previous year. However, workers continued to enjoy a strong labor market.” Nearly a quarter of those surveyed said that while their spending increased in 2022, their income remained the same. About two-thirds said they stopped using the product or reduced its quantity due to high market prices, and 51% said they cut their costs. In fact, approximately 28% answered that they did not have health insurance in the last year because they cannot bear the costs.

All groups, regardless of gender and origin, report a deterioration in their economic situation compared to last year. In terms of income, those earning between $25,000 and $99,999 a year saw the largest decline. Also, 33% said they received a raise or pay raise in the last year. The only bright spot in the Fed’s review was the benefits of a strong labor market. The unemployment rate fell to 3.4% in April, while wage growth remained strong.