Parents feel financially squeezed, cite high prices as top concern: NPR

Rising prices remain a major concern for Americans, according to a new survey from the Federal Reserve. But 72% of adults say they live comfortably financially or are at least doing well.

Frédéric J. Brown/AFP via Getty Images

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Frédéric J. Brown/AFP via Getty Images

Rising prices remain a major concern for Americans, according to a new survey from the Federal Reserve. But 72% of adults say they live comfortably financially or are at least doing well.

Frédéric J. Brown/AFP via Getty Images

Americans overwhelmingly say they are “doing at least well financially,” but most remain worried about rising prices, and one in six say they have bills they can’t pay, according to a report released Tuesday by the Federal Reserve.

Each year, the Fed asks thousands of people about their household finances, including their income, savings and spending. This year’s snapshot shows that family budgets have generally remained stable over the past year, but they are not as strong as they were two years ago, when emergency relief payments pandemic were helping to replenish people’s bank accounts and inflation was just starting to set in.

The survey, conducted last fall, found that 72 percent of adults are living comfortably financially or at least doing well. This is down from 73% in 2022 and 78% in 2021.

Childcare is a major expense

One group that saw a greater decline in well-being was parents. Just 64% of those with children under 18 said they were doing at least well, down from 75% in 2021. Childcare represents a major expense for many families, often costing as much as less than half the price of their accommodation. The median monthly cost of child care was $800, or $1,100 for those spending more than 20 hours per week.

About a third of respondents said their monthly income had increased over the year, while a slightly higher percentage – 38% – said their monthly expenses had increased.

2 in 3 Americans say inflation has made their finances worse

Although inflation is lower today than it was a year ago and less than half of what it was in 2022, two-thirds of Americans say rising prices have made their financial situation, including 19% who say their situation is much worse. About 1 in 3 people said inflation had little effect on their family’s finances.

1 in 3 Americans couldn’t cover a $400 surprise expense

Not surprisingly, lower-income households reported more financial difficulties, such as being unable to pay their bills each month or skipping meals or medical care. Overall, 48% of respondents said they had money left over after paying expenses, while 17% said they had unpaid bills in the previous month.

Faced with an unexpected $400 expense, 63% of respondents said they could cover it with savings. This figure is unchanged from 2022, but down slightly from 2021. About 1 in 8 people said they would not be able to manage such an expense, by any means.

Double-digit price increases in home insurance

This year’s report included a new question about homeowner’s insurance, whose prices rose by double digits last year. While the vast majority of homeowners have insurance, some of the most vulnerable people do not, including more than 20% of low-income families in the South.

“This perspective continues to help the Federal Reserve better understand how families are coping with the current economic challenges they face,” Federal Reserve Governor Michelle Bowman said in a statement.