The Federal Reserve published the results of its annual study on Monday, which sought to shed light on the impact of the country’s high inflation rate on Americans’ confidence in their economic security.
The survey found that, although the US’ inflation rate has tumbled compared to last summer’s 40-year high 9.1 percent, it has greatly reduced American households’ trust in the country’s financial capability.
Responding to the study, many said they had been forced to either tap into their savings to handle the economic downturn or opt for buying cheaper products.
According to the survey, the share of US adults reporting that they were doing “at least okay financially” in 2022 decreased by five percentage points, registering the steepest fall since the survey was launched a decade ago.
At the other end of the scale, the share of those saying they were worse off shot up 15 percentage points to 35%, the highest level by far since the Fed first started asking that question in 2014.
Fifty-four percent of American adults said their budgets had been affected “a lot” by price increases, with parents of children under 18, Black and Latin American adults and people with disabilities ranking among the most likely to report an impact from inflation.
Overall, one-third of households cited inflation as their main financial challenge, up more than fourfold from 2016.
The survey, which recorded the responses of more than 11,000 people, also showed that fewer Americans reported being able to cover an unexpected $400 expense using cash, savings, or a credit card that could be immediately paid off.
The bleak report came after a late-March study showed that the United States is poised to enter a recession this year and face high inflation well into 2024.
More than two-thirds of respondents to the National Association for Business Economics (NABE) survey saw inflation remaining above four percent in the US at the end of the year.
It came after the Federal Reserve raised interest rates by 4.75 percentage points in a bid to tackle soaring inflation in the country, which touched a record level last year amid the collapse of several major American banks.
Silvergate Bank, Silicon Valley Bank, Signature Bank, and First Republic Bank all crashed within a couple of weeks, plunging the financial markets into crisis.