More than a quarter of North American adults are facing financial difficulties. 72% of Americans reported “living comfortably” or “doing well,” according to December 2023 data from the Federal Reserve.
The remaining 28% were “just surviving” (19%) or “struggling to survive” (9%). The 72% who are at least doing well is the lowest percentage since the onset of the COVID-19 pandemic in April 2020. Before 2020, the rate had not fallen this low since 2016.
The Federal Reserve monitors whether people feel their financial situation is improving or worsening in the U.S. In 2023, 31% of respondents felt they were in a worse situation than the previous year. This represents a decrease from 35% in 2022, but still 11 points higher than the 20% of respondents who felt better off than a year ago.
From 2015 to 2021, more Americans felt their financial situation was improving. The opposite occurred in 2022 and 2023.
What Are the Main Financial Challenges for Americans?
In the past two years, more respondents cited inflation as the reason for their financial difficulties than any other cause. Inflation peaked at a 40-year high of 9.1% in June 2022 and has not yet returned to the Fed’s target of 2%.
After inflation, Americans pointed to the costs of basic living expenses and housing as their main financial challenges.
Does Education Affect Financial Security?
Adults with higher levels of education were more likely to feel financially secure. In 2023, 87% of respondents with a bachelor’s degree or higher reported being at least well, compared to 67% of those with some college or an associate degree and 63% of those with only high school diplomas or GEDs.
The lowest reported rate of financial security occurred among those who did not complete high school or equivalent: less than half reported being financially well.
Source: USA Facts