Board of Governors of the Federal Reserve System

The Federal Reserve Board's latest Report on the Economic Well-Being of U.S. Households found that most measures of economic well-being and financial resilience in 2018 were similar to, or slightly better than, those in 2017.

Overall, the financial experiences reported by the 11,000 adults surveyed in 2018 were largely positive, and many families have experienced substantial gains since the survey began in 2013, in line with the nation's ongoing economic expansion. When asked about their overall economic well-being, 75 percent of U.S. adults said they were "doing okay" or "living comfortably"—up 12 percentage points from 2013. The survey also asked how they would pay for a hypothetical unexpected expense of $400. Sixty-one percent said they would pay the expense with cash, savings, or a credit card paid off at the next statement; 27 percent would borrow or sell something; and 12 percent would not be able to cover it. In 2013, only half of adults said they would pay with cash or its equivalent.

Despite the improved finances of many adults, the survey continued to detect areas of financial distress as well as persistent differences by race, education level, and, in some cases, geography. Nearly 8 in 10 whites reported doing at least okay financially, compared to two-thirds of blacks and Hispanics. A similar difference exists by education: among those with a bachelor's degree or higher, 87 percent were doing at least okay, compared with 64 percent of those with a high school degree or less. Of those who live in middle- and upper-income neighborhoods, 8 in 10 reported overall satisfaction with their community, compared to 6 in 10 of those living in low- and moderate-income neighborhoods.

The report draws from the Board's sixth annual Survey of Household Economics and Decisionmaking (SHED), which was conducted in October and November 2018 and examined the financial lives of U.S. adults and their families. Respondents described their experiences on a wide range of topics including income, employment, dealing with expenses, banking and credit, housing, education, and retirement. The responses were weighted to be nationally representative of adults, aged 18 and over, in the United States.

A new topic in this year's report—aimed at understanding the experiences of bank customers—was the ability of adults to access funds in their bank accounts. Thirteen percent of those with a bank account had at least one problem accessing funds in their account in the prior year. Problems with a bank website or mobile app (7 percent) and delays in when funds were available to use (6 percent) were the most common problems cited. Those with volatile income and low savings were more likely to experience these problems.

"As this report shows, we continue to see the growing U.S. economy supporting most American families," said Federal Reserve Board Governor Michelle W. Bowman. "At the same time, the survey does find differences across communities, with just over half of those living in rural areas describing their local economy as good or excellent compared to two-thirds of those living in cities. Across the country, many families continue to experience financial distress and struggle to save for retirement and unexpected expenses."

The Board's SHED data look at how individuals are managing their finances and making decisions vital to their financial lives and futures. Among the report's other key findings:

• Changes in family income from month to month remained a source of financial strain for some individuals. Three in 10 adults had family income that varied from month to month. One in 10 struggled to pay their bills at some point in the prior year because of monthly changes in income. Financial support from family or friends to make ends meet was also common, particularly among young adults.
• Most adults are working as much as they want to, an indicator of full employment; however, some remained unemployed or underemployed. One in 10 adults were not working and want to work, though many were not actively looking for work. Four percent of adults in the SHED were not working, wanted to work, and had applied for a job in the prior 12 months, similar to the official unemployment rate of 3.8 percent in the fourth quarter of 2018. Two in 10 were working but said they wanted to work more. Blacks, Hispanics, and those with less education are less likely to be satisfied with how much they were working.
• Two-thirds of graduates with a bachelor's degree or more believed that their educational investment had paid off financially, but only 3 in 10 of those who started but did not complete a degree shared this view.
• More than half of young adults who attended college took on some debt to pay for their education. Most borrowers were current on their payments or have successfully paid off their loans. More than one-fifth of borrowers who went to private for-profit schools were behind on their loan payments, versus 8 percent who attended public institutions and 5 percent who attended private not-for-profit institutions.
• Many adults were struggling to save for retirement. Thirty-six percent of non-retired respondents thought their retirement saving was on track, but one-quarter had no retirement savings or pension whatsoever. Even among those who had some savings, people commonly lacked financial knowledge and were uncomfortable making investment decisions.

The report, downloadable data, and a video summarizing the survey's findings may be found at: https://www.federalreserve.gov/consumerscommunities/shed.htm.

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