US families were in the best financial position in nearly a decade last year — before the Omicron variant of Covid-19 hit, the Federal Reserve said Monday.
Despite concerns about the overall economic situation, more Americans felt comfortable with their finances and were able to deal with an unexpected expense, according to the Fed’s annual Economic Well-Being of US Households report.
But the survey did not ask about inflation, which has become the major economic challenge for policymakers, politicians and consumers, as consumer prices have risen at the fastest pace in more than four decades.
“Self-reported financial well-being reached its highest level since the survey began in 2013, with 78 percent of adults doing okay or living comfortably financially,” the report said.
And the share of adults who would be able to cover a $400 emergency expense like a car repair with cash or credit card also was the highest in the history of the survey, at 68 percent, compared to just 50 percent in 2013.
The survey of 11,000 adults was conducted in October and November of 2021, before the latest wave of infections, showed positive trends in financial wellbeing, and before inflation picked up speed causing the Fed to begin to raise interest rates aggressively to cool the economy.
The survey showed improvements all racial and ethnic groups, with a particularly large increase among Hispanic adults.
However, 11 percent of adults said they could not pay an emergency expense by any method, and nearly a quarter had difficulty paying bills that month or were close to it, the report said.
And in contrast to their personal financial situation, only 24 percent of adults rated the national economy as “good” or “excellent” in 2021, down two percentage points from 2020 and about half the rate seen in 2019.
“This important perspective helps the Federal Reserve better understand the economic challenges that existed during that phase of the pandemic recovery,” Fed Governor Michelle Bowman said in a statement.
