Inflation in 2022 placed a major constraint on Americans desperate to put pandemic challenges behind them and stabilize their financial lives. Despite a robust labor market throughout the year, inflation led to an equally remarkable amount of financial worry for many of the nation’s households.
According to the Federal Reserve’s annual Economic Well-Being of U.S. Households report, 35% of Americans across all income levels are worse off now than they were one year ago, “suggesting a widespread effect of higher prices across the population.”
This is up from 20% in 2021 and is the largest share on record since the Fed first asked the question in 2014. Skyrocketing costs weighed heavily on the average American household in 2022. As one respondent stated, “Energy costs, grocery costs, gasoline: everything we buy now has increased drastically.”
While respondents mentioned general needs, retirement and savings, housing, employment, medical, debt and education as their most significant financial challenges in 2022, inflation was by far the most pressing concern reported by respondents, at 33%. In 2016, only 8% cited inflation as their biggest financial burden. In 2022, 28% of respondents said they had no financial challenges or concerns, down from 53% in 2016.
In addition to questions about their own financial situation, those surveyed were asked to assess the state of the national economy, which took a nosedive in ratings from the previous year, depressed by brutal inflation, a rattled stock market and near-constant talk of an impending recession.
Those who perceived the national economy as “good” or “excellent” dropped to 18%, the lowest share since the survey started asking the question in 2017 and a 32% decrease from the pre-pandemic survey finding of 2019, per the report.
In January, a Gallup poll backed this feeling of being worse off now versus a year ago when it found that exactly half of Americans said they are worse off than they were in Jan. 2021. Since Gallup began asking Americans about their personal financial circumstances in 1976, the only other times 50% or more of respondents reported being worse off was in 2008 and 2009, during the Great Recession period.
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The Economic Well-Being of U.S. Households in 2022 report is based on data drawn from the Survey of Household Economics and Decisionmaking (SHED), which has been conducted since 2013 and includes answers from 11,667 American adults fielded between Oct. 21 through Nov. 1, 2022.
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