Board of Governors of the Federal Reserve System

Overall Financial Well-Being

The share of adults doing at least okay financially was similar to 2022 yet remained well below the recent high in 2021.² Financial well-being was also generally unchanged from 2022 for most population segments. One notable exception was parents, who saw further large declines in the share doing at least okay. Inflation continued to be a top financial concern, despite the inflation rate falling over the prior year.

Current Financial Situation

Near the end of 2023, 72 percent of adults were at least doing okay financially, meaning they reported either "doing okay" financially (39 percent) or "living comfortably" (33 percent). The rest reported either "just getting by" (19 percent) or "finding it difficult to get by" (9 percent).

The 72 percent of adults doing at least okay financially was essentially unchanged from 2022 yet was down 6 percentage points from the recent high of 78 percent in 2021 (figure 1).

As with previous surveys, adults with at least a bachelor's degree continued to report higher financial well-being than did adults with lower levels of education. Eighty-seven percent of adults with at least a bachelor's degree reported doing at least okay financially, compared with 48 percent of those with less than a high school degree (figure 2).

The gap in well-being by education has narrowed slightly in recent years. The share of adults with at least a bachelor's degree that reported doing at least okay financially declined 4 percentage points since 2021, while this same share among those with less than a high school degree has remained relatively flat.³ That said, taking a longer view reveals a widened gap in financial well-being by education. Since 2013, the share doing at least okay among adults with at least a bachelor's degree increased 10 percentage points, whereas those with less than a high school degree saw essentially no lasting gains (figure 2).

Differences in financial well-being across racial and ethnic groups persisted in 2023. Eighty-two percent of Asian adults were doing at least okay financially, followed by 76 percent of White adults, 68 percent of Black adults, and 61 percent of Hispanic adults (figure 3).⁴

Similar to the overall population, financial well-being among Asian, Hispanic, and White adults ticked down slightly from the prior year and was below the peak in 2021. In contrast, Black adults saw an increase in well-being, with the share doing at least okay climbing 4 percentage points to 68 percent, reaching the same level as in 2021. This increase was concentrated among Black adults with some college or a technical or associate degree.

Parents living with their children under age 18 ("parents") are one group that has seen sizeable swings in well-being in recent years, falling sharply after the onset of the pandemic, rebounding in 2021, and falling sharply again since then. The share of parents doing at least okay financially fell to 64 percent in 2023, down 5 percentage points from the prior year and down 11 percentage points from 2021 (figure 4).⁵

Financial well-being continued to differ by a range of other dimensions, including disability status, LGBTQ+ status, metropolitan status, and neighborhood income (table 1).⁶ For instance, 55 percent of adults with a disability were doing at least okay financially, markedly lower than that seen among adults without a disability.⁷

Table 1. At least doing okay financially (by demographic characteristics)

Adults identifying as LGBTQ+, and particularly those identifying as transgender or nonbinary, reported lower financial well-being than those not identifying as LGBTQ+. Two-thirds of adults identifying as LGBTQ+ were doing at least okay financially, compared with 73 percent of those not identifying as LGBTQ+.⁸ Moreover, 62 percent of transgender or nonbinary adults were doing at least okay financially.⁹

Financial well-being also varied according to where people lived. People living in non-metro areas had lower levels of financial well-being than those living in metro areas.¹⁰ Additionally, those living in low- or moderate-income communities were faring worse than those in middle- or upper-income communities.

Changes in Financial Situation over Time

The survey also measures overall financial well-being by asking respondents whether they are better or worse off financially than they were 12 months earlier. Measuring well-being in this way helps track changes in perceived well-being over time, as some individuals may have felt worse off financially than they were a year earlier, for instance, even if they felt they were still doing okay overall (or that their financial well-being was improving even if they were still struggling overall).

Thirty-one percent of adults said they were worse off financially than a year earlier, down from 35 percent in 2022 yet still well above the levels seen in prior years (figure 5). The share doing about the same as a year earlier rose 2 percentage points to 48 percent, while the share who said they were better off rose 1 percentage point to 20 percent.

Adults with lower levels of education continued to be the most likely to say they were doing worse off than a year prior. In 2023, 37 percent of adults with less than a high school degree reported doing worse off financially, compared with 27 percent of those with at least a bachelor's degree.

To get a longer-term perspective, individuals were also asked to compare their current financial circumstances to how they view their parents' financial situation at the same age. Looking across generations shows evidence of perceived economic progress over time, despite financial setbacks during the pandemic. A majority of adults (53 percent) thought they were better off financially than their parents had been. This share is similar to 2022 yet down from the 57 percent who thought so in 2019, before the onset of the pandemic. In 2023, one-fourth thought they were worse off than their parents were at the same age.

People holding at least a bachelor's degree were more likely to report that they were doing better off financially than their parents had been at the same age. This was particularly true among first-generation college graduates—those who completed a bachelor's degree and whose parents did not—among whom nearly two-thirds thought they were better off financially than their parents had been.

Looking across different generations shows that older cohorts were the most likely to report being better off financially than their parents had been at the same age. Nearly 60 percent of adults age 60 and older thought they were better off financially than their parents had been, compared with about half of adults under age 60.

Main Financial Challenges

The survey further explored financial well-being by posing an open-ended question asking people about their main financial challenges or concerns.¹¹ The responses were classified into broad categories based on keywords or phrases.¹² Inflation was the most common challenge, with more than one-third classified into that category, followed by basic living expenses and housing (figure 6). Thirty-one percent said they did not have any financial challenges or concerns.

The share of people citing inflation as their main financial challenge was similar to 2022.¹³ The prevalence of other types of financial concerns, such as basic living expenses, housing, and employment, were also similar to 2022. Retirement was somewhat less of a concern in 2023, consistent with the increase in the share of people who thought their retirement savings were on track (see the "Retirement and Investments" section of this report).

When describing challenges related to inflation, many people mentioned the cost of food and groceries. For example, one respondent stated that "[the] increase in cost of food has significantly impacted [my] budget." Another said, "…rising food prices hurt daily." Those with incomes under $100,000 were more likely to specifically mention the cost of food and groceries as a concern.

People also expressed concerns about housing affordability. For example, one respondent said, "rent costs keep rising and it is hard to save enough for a down payment to buy a house." Indeed, when renters were later asked why they rent instead of own, the most cited reason was the inability to afford a down payment (see the "Housing" section of this report).

Concerns about housing were more prevalent among renters, younger adults, and those living in the West.¹⁴ For example, about 20 percent of renters mentioned housing-related challenges, nearly double the share in the overall population.

Local and National Economic Conditions

Along with questions about their own financial circumstances, people were asked to rate their local economy and the national economy as "excellent," "good," "only fair," or "poor." Forty-two percent of adults rated their local economy as "good" or "excellent" in 2023, up from 38 percent in 2022, yet well below the 63 percent of adults who rated their local economy as "good" or "excellent" in 2019, before the pandemic.

Looking across census regions and metropolitan status shows that the improvement in people's perception of their local economy was widespread. The one exception was those living in a non-metro area, who rated their local economy similarly to 2022. Moreover, those living in a non-metro area continued to rate their local economy much less favorably than those living in a metro area, with just fewer than 3 in 10 rating their local economy as good or excellent (table 2).

Table 2. Self-assessment of local economy as good or excellent (by census region and metropolitan status)

People's perception of the national economy also showed modest improvement. The share rating the national economy as "good" or "excellent" rose to 22 percent in 2023, up from a series low of 18 percent in the prior year. That said, perceptions of the national economy remained far more pessimistic than before the pandemic in 2019, when one-half of adults rated the national economy as "good" or "excellent." Additionally, the gap between people's perceptions of their own financial well-being and their perception of the national economy has nearly doubled since 2019 (figure 7).

 

References

 2. Unless otherwise specified, results in this report are from the Federal Reserve's Survey of Household Economics and Decisionmaking. The survey was fielded in October 2023, and results reflect financial situations at that time. Results typically capture financial experiences at the time of the survey or in the 12-month period before the survey rather than the precise calendar year. Results discussing the period shortly after the onset of the pandemic are based on the two supplemental surveys that were fielded during the pandemic in April 2020 and July 2020. Return to text

 3. The recent declines in financial well-being among those with at least a bachelor's degree occurred for both those with student loans and those without. That said, those with student loans saw larger declines. Return to text

 4. The reported categorizations reflect the largest statistical groupings but are neither exhaustive nor the only distinctions important to understand. Sample sizes for other racial and ethnic groups and subpopulations are not large enough to produce reliable estimates. Additionally, results for Asian adults are sometimes excluded when the sample size is insufficient to provide a reliable estimate. Return to text

 5. Other measures in the survey have also shown evidence of decline in the financial circumstances of parents since 2021, but much of this decline occurred over the period from 2021 to 2022. For example, the share of parents who would cover a $400 emergency expense exclusively using cash, savings, or a credit card paid off at the next statement reached a high of 64 percent in 2021, then fell to 57 percent in 2022 and 56 percent in 2023. Return to text

 6. Neighborhood income is defined using the Community Reinvestment Act definition. Under this definition, low- and moderate-income refers to communities that have a median family income of less than 80 percent of the area median income. For details on the definition, see Board of Governors of the Federal Reserve System, "Community Reinvestment Act (CRA) Resources," https://www.federalreserve.gov/consumerscommunities/cra_resources.htm. Return to text

 7. Disability status is defined based on a five-question functional limitation sequence that asks about hearing, vision, ambulatory, self-care, and independent living difficulties. This approach for determining disability status is similar to the six-question sequence used for the American Community Survey (see U.S. Census Bureau, "How Disability Data Are Collected from the American Community Survey," https://www.census.gov/topics/health/disability/guidance/data-collection-acs.html). Return to text

 8. Survey respondents could report their sexual orientation and gender identity on a demographic profile survey previously conducted by the survey vendor. Respondents are classified as LGBTQ+ based on responses to these questions. Return to text

 9. Other research has also shown that LGBTQ+ adults were more likely to face economic insecurity. For example, see Thom File and Joey Marshall, "Household Pulse Survey Shows LGBT Adults More Likely to Report Living in Households with Food and Economic Insecurity than Non-LGBT Respondents," America Counts: Stories Behind the Numbers (Suitland, MD: U.S. Census Bureau, August 11, 2021), https://www.census.gov/library/stories/2021/08/lgbt-community-harder-hit-by-economic-impact-of-pandemic.html. Also, see Ana Hernández Kent and Sophia Scott, "LGBTQ+ Adults Report Struggles with Food, Housing Costs and Mental Well-Being," On the Economy Blog, Federal Reserve Bank of St. Louis, December 20, 2022, https://www.stlouisfed.org/on-the-economy/2022/dec/lgbtq-adults-report-struggles-food-housing-mental-well-being. Return to text

 10. According to the U.S. Census Bureau, "The general concept of a metropolitan statistical area is that of a core area containing a substantial population nucleus, together with adjacent communities having a high degree of economic and social integration with that core." See U.S. Census Bureau website at https://www.census.gov/programs-surveys/metro-micro/about.html. Return to text

 11. The question text is as follows: "In a couple of words, please describe the main financial challenges or concerns facing you or your family. If none please click the "None" box." Three percent of respondents did not provide a text response and did not check the "None" box. These respondents were excluded from the analysis. Return to text

 12. Text entries were categorized based on words or word stems included in the response. "Inflation" includes responses with inflat, cost, pay more, paying more, increas, expensive, price, pricing, higher, rising, skyrocket, sky rocket, going up, gone up. Those with bill, util, electric, heat, everything, necessities, basic needs, essential, can't afford, not enough, get by, getting by, surviv, struggl, no money, challenge, living expense, or food were categorized as "basic living expenses;" those with retire, 401k, stock, market, portfolio, pension, old age, Medicare, SSI, IRA, 401(k), Social Security, save, saving, or fund were categorized as "retirement and savings;" those with hous, rent, home, or mortgage were categorized as "housing;" those that mentioned work, job, wage, employ, raise, paycheck, pay check, salary, laid off, part time, hours, full time, overtime, skills, or unemp were categorized as "employment;" those with medical, medicine, health, Medicaid, Medicare, dental, dentist, cancer, sick, ill, doctor, hospital, or prescription were categorized as "medical;" those with credit, loan, debt, or owe were categorized as "debt;" those that mentioned college, school, education, tuition, degree, university, or student were categorized as "education." Responses may be included in multiple categories or no categories, as the categories are neither exhaustive nor mutually exclusive. Return to text

 13. The inflation rate fell from 7.8 percent in October 2022 (when the 2022 SHED was conducted) to 3.2 percent in October 2023 (when the 2023 SHED was conducted). These inflation rates are based on the non-seasonally adjusted Consumer Price Index for All Urban Consumers (CPI-U) as of the 2022 and 2023 surveys. Return to text

 14. References to geographic regions in this report are based on the four census regions. For details on the states in each region, see the U.S. Census Bureau's website at https://www2.census.gov/geo/pdfs/maps-data/maps/reference/us_regdiv.pdf. Return to text