WASHINGTON – Most American households say their finances have strengthened slightly, but nearly half report that they would struggle to meet $400 in expenses from an unexpected emergency, according to the Federal Reserve’s annual survey on economic well-being.
The latest Fed survey, conducted in October and November, found that 69 per cent of those responding reported that they were either “living comfortably” or “doing ok.” That’s up from 65 per cent in the 2014 survey and 62 per cent in 2013.
However, 31 per cent, or approximately 76 million adults, said they were either “struggling to get by” or were “just getting by.” And 46 per cent said they would have difficulty covering an emergency bill of $400.
Those in that group said they either could not pay the amount or would have to borrow or sell something to cover the expense. The 46 per cent figure is down from 47 per cent in the 2014 survey and 50 per cent in the 2013 survey.
The survey found that 22 per cent of workers were working two or more jobs to make ends meet.
“The new survey findings shed important light on the economic and financial security of American families seven years into the recovery,” said Fed board member Lael Brainard. “It’s important to identify why so many families face continued financial struggles and to find ways to help them overcome them.”
The survey found that 77 per cent of adults expressed confidence that they had the necessary skills to get the kind of job that they wanted. That is up 10 percentage points from the first survey in 2013 and a sign that the labour market has continued to improve from the 2007-2009 recession. The unemployment rate now stands at 5 per cent, down from a high of 10 per cent in the fall of 2009.
Not all groups reported improvements in their financial well-being.
Those with higher levels of education were most likely to say their financial situation has improved over the past year. Of those with at least one college degree, 31 per cent reported an improvement in their financial situation, while 15 per cent reported a decline. Among those with a high school degree or less, 22 per cent said their financial well-being had improved, while 21 per cent said it had declined.
Among those who did go to college, more than half of adults 30 or younger reported they took out at least some debt to finance their education. Education satisfaction differed significantly depending on type of institution. Of adults who attended a for-profit institution, nearly half said that in hindsight, they would have attended a different school.
The Fed’s survey was based on responses from 5,700 individuals who were asked questions covering their savings behaviour, access to banking and credit and retirement planning.