4 in 10 households struggling financially, Federal Reserve study finds
Survey shows recovery from recession uneven
8/9/2014WASHINGTON — Four in 10 U.S. households are straining financially five years after the Great Recession — many struggling with tight credit, soaring education debt, and profound issues related to savings and retirement, according to a new Federal Reserve survey.
The wide-ranging Fed study assessing the economic well-being of Americans shows that the economy has made progress to the point where most households said they were “living comfortably” or doing OK financially.
But almost 40 percent reported last fall that their families were “just getting by” or struggling to do so, and more people said their financial situation was worse rather than better off compared with five years earlier.
The survey, conducted in September and reported Thursday, found that the recession had forced substantial shares of the population to put off big purchases or delay major decisions such as moving to a new city or getting married. And many people leaned on others to get through the hard times.
“The survey indicates that many households have been providing assistance to one another during periods of financial distress,” the 100-page Fed report said, noting that 34 percent helped friends or family with money.
Overall, the Fed’s findings are consistent with many other studies and data depicting the deep and lingering effects of the 2007-09 recession. They provide fresh evidence that the recovery has been slow and uneven, generally skewed to the wealthy, and flesh out with numbers some commonly held assumptions.
The survey found, for example, that 15 percent of those who had retired since 2008 had done so earlier than planned because of the downturn. Only 4 percent said they had retired later than expected. Based on demographics, that translates into roughly 2 million more people retiring since 2008 than if the recession had not occurred.
“This suggests that some of the folks who dropped out of the labor force during the recession will not be returning,” said Scott Hoyt, an economist at Moody’s Analytics.
This latest snapshot adds to the understanding of the severity of the Great Recession’s effect on households and individuals. The report suggested that Americans had a fairly positive outlook about their finances. More than 60 percent said they expected their income to stay the same in the next 12 months, with 21 percent looking for it to increase. Only 16 percent expected it to decline.