Vol. 27, No. 3
Third Quarter 2014
- Fed Chair Yellen Discusses Households' Vulnerability
- FOMC Clarifies Plans for Policy, Securities
- Federal Reserve Adopts Liquidity Coverage Ratio
- Many Families Still Struggling through Recovery: Fed Survey
- Fed Chair Yellen Addresses Employment Challenges
- Report Examines Households Economic Well-Being
- Recent Survey Details Bank Lending Trends
- Fed Vice Chair Addresses Postrecession Environment
- Atlanta Fed’s Lockhart Shares Framework for Liftoff
- Fed Vice Chair Addresses Stability
- Regulation the Best Tool for Financial Stability, Says Fed Chair Yellen
U.S. Households Still Feeling Effects of Great Recession
The Federal Reserve Board in early August released its "Report on the Economic Well-Being of U.S. Households." The report, based on the Board's 2013 Survey of Household Economics and Decisionmaking (SHED), summarizes the roughly 4,100 responses.
The survey results offer a glimpse into the financial lives of U.S. households, including housing and living arrangements, credit access and behavior, education and student loan debt, savings, retirement, and health expenses.
"Overall, the survey found that many households were faring well, but that sizable fractions were at the same time displaying signs of financial distress," the report noted. For instance, 60 percent of respondents said they are "doing okay" or "living comfortably" financially. Yet, a significant share of U.S. households is on more precarious financial footing—a quarter of respondents reported they were "just getting by," and another 13 percent said they are struggling to do so.
Slow recovery for many households
As the broader economy slowly recovers from the Great Recession, many households are still feeling its effects. Thirty–four percent of respondents said they are worse off financially than they were in 2008. Another 34 percent said their financial situation was about the same, and 30 percent said they are somewhat or much better off.
Some other findings from the survey:
- Homeowners generally had a positive outlook on the housing market, with 40 percent expecting home prices in their neighborhood to increase during the following year.
- Some respondents perceived the availability of credit to be relatively low—19 percent reported putting off applying for credit because they thought they’d be turned down, and just over half were confident in their ability to get a mortgage.
- Twenty–four percent of respondents reported having education debt, either for their own schooling or a family member's. Nearly a fifth of them are behind on their payments in some way, and 9 percent have loans in collections.
- Those who dropped out of the program they borrowed money for were far more likely to report having to cut back on spending in order to make their payments. Respondents in this category were also more likely to say that the costs of their education outweighed the financial benefits, the report noted.
- Just over half of respondents reported saving at least some of their income in 2012. Perhaps not surprisingly, those with a checking, savings, or money market account reported much higher levels of savings than the unbanked.
- When asked about their ability to withstand financial emergencies, such as an extended illness or job loss, the results generally indicated that "many households appear ill–prepared for emergencies." Less than half of respondents said they would cover a $400 emergency expense without selling something or borrowing money.
- Last, the survey found that many households are ill–prepared for retirement. Nearly one-third of those still working reported having no retirement savings or pension, including 19 percent of those close to retirement. Further, almost half of adults said they were not actively thinking about retirement.
The survey results provide new insights into how U.S. households are faring several years after the Great Depression. Although the majority of the population is making progress, the report highlights the significant challenges that remain for significant pockets of the population.
August 19, 2014