Historically high inflation took a notable toll on Americans' finances last year, when rising prices outpaced wage gains and chewed into household budgets, according to newly released Federal Reserve data.
The central bank's 2022 Survey of Household Economics and Decision Making (SHED) report released Monday, which was fielded from October 2021 through November 1, 2022, found the share of U.S. adults who reported they were worse off financially than a year earlier jumped from 20% to 35% – the highest level since the question was first asked nearly a decade ago.
"Overall financial well-being declined markedly," according to the report, which found 73% of respondents said they were doing at least OK financially last year, a drop of five points from the year prior.
The share of adults who reported spending less than their income in the month before the survey fell below pre-pandemic levels, while the share of Americans who reported their credit card debt increased rose.
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The Fed said "inflation affected people's spending and saving choices in several different ways," pointing out that nearly two-thirds of adults stopped using a product or used less because of higher prices, 64% switched to a cheaper alternative, and more than half (51%) of Americans reduced their savings due to their budgets being squeezed.
Working adults also showed greater anxiety about being able to afford to retire. Only 31% of non-retirees reported that their retirement savings plans were on track last fall, a nine-point drop from 2021.
Although inflation has eased from a peak of 9.1%, it remains roughly more than double the pre-pandemic average and well above the Fed's 2% target rate.
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The Fed has raised interest rates 10 consecutive times to the highest level in 16 years in its most aggressive tightening campaign since the 1980s as it battles to bring prices down, but another survey released Monday shows America's top economists do not expect the central bank to reach its 2% goal any time soon.
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The National Association for Business Economics (NABE) outlook survey found just 2% of business forecasters said they believe inflation will have slowed to 2% by the second half of 2023, while a 59% majority don’t believe inflation will decline to the Fed’s target level until 2025 or later.
FOX Business' Megan Henney and Eric Revell contributed to this report.
