Report Shows Financial Well-Being Declined in 2022

The Federal Reserve Board released on May 22 a new report, “Economic Well-Being of U.S. Households in 2022,” summarizing findings from the annual Survey of Household Economics and Decision-making (SHED). Thirty-five percent of adult respondents reported being worse off financially in 2022 than they were 12 months earlier, an increase from the 20% who in 2021 reported being financially worse off and the highest level in the survey’s 10-year history. The share of respondents who said they would pay cash or a cash equivalent to cover a $400 emergency expense declined from 68% in 2021 to 63% in 2022, with significant differences by race and ethnicity. Eighty-two percent of Asian adults, 71% of white adults, 47% of Hispanic adults, and 43% of Black adults would use cash to pay for an unexpected $400 emergency expense. Adults with children experienced a larger decline than those without children in the share of those using cash to cover such an expense, presumably due to the expiration of the Child Tax Credit at the end of 2021.

Now in its 10th year, SHED is an online survey of a nationally representative sample of 11,667 adults over age 18. Participants without access to a computer or internet were recruited and provided a laptop to access the internet and complete the survey. Respondents are asked about their overall financial well-being, income, employment, ability to handle emergency expenses, and living arrangements, among other things.

Twenty-seven percent of adults reported renting their home. The median monthly amount paid for rent was $1,000 compared to $1,400 for mortgage-holders. However, renters were roughly twice as likely as homeowners to be cost-burdened, with median rent payments at 32% of family income. At some point in the prior year, 17% of all renters fell behind on their rent, a finding similar to 2021 levels. Twelve percent of White renters reported falling behind at some point, compared to 24% of Hispanic renters and 26% of Black renters. Of those who reported being behind on rent at some point during the prior year, 45% said they were behind when they completed the survey, amounting to 8% of all renters. Sixty-five percent of renters said they rent because they cannot afford a down payment, up from 62% in 2019. However, 56% of renters indicated that they rent because it is more convenient or flexible than owning a home, up from 52% in 2019.

Despite rent inflation, only 3% of all renters, and 15% of those renters who had moved, reported moving because of a rent increase. Thirteen percent of renters who moved in 2022 did so because of an eviction or threat of eviction.

Read the report at: