Fed Study: Record Number Doing Worse Financially

An annual study by the Federal Reserve released this month finds a record share of 35% of people saying they were worse off financially in 2022 than they were in 2021.

The annual Federal Reserve Survey of Household Economics found a 15% rise in the number of people feeling they were worse off financially from 2021 to 2022, the largest share since the question was first asked in the 2014 survey.

The survey also illustrates the economic roller coaster brought on by the COVID-19 pandemic with just 13% and 14% saying they were worse off in 2018 and 2019 respectively, rising to 24% in 2020 and then dropping to 20% in 2021, before jumping to 35% in 2022, a 15% increase.

During that same period, the number of people reporting that they were better off financially dropped from 32% in 2019 to 25% in 2020 and 2021 respectively.

That number then dropped to 19% in 2022, also the lowest number since the question was first asked in 2014, according to the study.

Those in the survey that said they were doing “OK” dropped 5 percentage points in 2022 from 78% in 2021 to 73%, the lowest it has been since 2016’s 70%.

According to the study, the decline occurred “broadly” across the population and marked the first time since the beginning of the survey that those with at least a bachelor’s degree saw a decline in their feeling of economic well-being.

The survey results also showed an increase in the amount of people relying on credit card debt to pay expenses as the number of people who said they spent less than their monthly income decreased.

The survey was conducted between Oct. 21 to Nov. 1, 2022, with 11,775 people participating, according to the Federal Reserve.

Completed annually in the fourth quarter of the year, it is the 10th such economic survey the central bank has conducted since its inception in 2013.

It measures the economic well-being of U.S. households and identifies risks to their finances across several indicators including credit access and behaviors, savings, retirement, economic fragility, and education and student loans.

The Federal Reserve is the central bank for the United States and “performs five general functions to promote the effective operation of the U.S. economy and, more generally, the public interest.”

It is led by Chair Jerome Powell, who was appointed by former President Donald Trump in 2018 and re-appointed by President Joe Biden in 2022, according to the organization.