A record number of adults were worse off financially in 2022 than the previous year—and inflation is still putting pressure on household budgets.
That's according to data released today from the Federal Reserve as a part of their 2022 Economic Well-Being of U.S. Households survey. The survey found that overall financial well-being was down and only 68% of adults said they were at least financially OK, down 5 percentage points from the year before.
More specifically, 35% of adults said they were financially worse off than the year before, the highest percentage that felt that way since the survey began in 2014.
Inflation hit a 40-year peak of 9.1% in June 2022, and while price growth is now down to 4.9%, economists expect it will stay stubbornly above the Fed's recommended 2% level for some time. The Fed's campaign of rate hikes designed to tame high inflation have made borrowing money more expensive, squeezing borrowers.
Inflation has increased monthly spending, and some respondents said their spending increased more than their income. Almost half of adults said they spent more on a monthly basis in 2022 than they did in 2021 and nearly a quarter of all respondents said they had seen no increase in income.
Inflation didn't only impact sending, but how people were saving as well. About half of adults weren't putting as much into their savings accounts as a direct response to higher prices. About one in five adults said the largest expense they could cover with their savings was $100, and another 14% said the largest expense they could cover was between $100 and $499.