Among all U.S. adults, 72% say they were “doing OK” in 2023 — the lowest percentage since April 2020, according to a just-released annual report from the Federal Reserve and reported on by CNBC. The sentiment has been trending down since 2021, when it was 78%.
Notably, the share of parents with children who say they are doing OK dropped from 69% in 2022 to 64% in 2023. A lot of that has to do with inflation, as 35% of the 11,400 survey respondents say rising prices were the “main financial challenge” in 2023, the highest of all self-reported answers, including retirement savings and debt, the CNBC report notes.
In addition, inflation has been taking its toll, despite wage growth. the survey suggests that the cumulative effect of high inflation over the past few years has been a strain on household finances.
Inflation did fall after reaching a year-over-year peak of 9.1% in June 2022, but it’s been hovering around 3% for nearly a year, according to the consumer price index, which tracks the price of commonly bought goods and services. Over the past three years, CPI inflation has increased by 18%.
And while consumer spending has been resilient despite rising inflation, cracks are starting to show. In March, spending grew by 0.8% while income only grew by 0.5%, which suggests that Americans are spending beyond their means. This follows a monthly trend of overspending since late 2023, CNBC noted.
Click here for a copy of the Fed report.