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Board of Governors of the Federal Reserve System
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Report on the Economic Well-Being of U.S. Households in 2013


The results of this survey tell a complex story of how households in the United States are faring several years after the Great Recession.

In general, it appears that the majority of the population is making progress in recovering from any effects the financial crisis had on their personal finances and household's financial well-being. Most people reported that they are living comfortably or doing okay, and the vast majority expected stable or growing incomes. Additionally, reflecting improvements in the housing market, a plurality of homeowners expect that home prices in their community will rise over the next year.

However, despite these overall reasons for optimism about the economic conditions of U.S. households, the findings in this survey highlight that economic challenges remain for a significant portion of the population. A slight majority of respondents--55 percent--reported saving money in the preceding year. Many report having little financial cushion. A minority of respondents reported having a rainy day fund, and only 56 percent said they could find any way to cover expenses were they to lose their main source of income for three months. Just over one-third reported that they are worse off financially than they were five years ago.

Almost half of respondents reported having given little or no thought to retirement savings, and of those who have, many either do not plan to retire, expect to keep working into retirement to pay for expenses, or do not know how they will pay for their retirement. Nearly a third had no retirement savings whatsoever. These challenges associated with retirement planning were exacerbated by the recession, which resulted in many respondents delaying their planned retirement.

The survey reveals other tensions in households' financial experiences. One-third of those who had applied for credit in the preceding year had been turned down or received less credit than they applied for, and nearly a fifth of respondents put off applying at all because they thought they would be turned down. These experiences and expectations vary by race/ethnicity, with blacks and Hispanics expressing less success and less optimism for success in applying for credit relative to whites. However, this relationship is complex. These differences are at least partially explained once other factors that also vary by race, such as income and education, are included in the analysis.

Furthermore, investment in education--frequently seen as a smart expenditure that pays off over time--may be viewed in varying ways when financed through debt. Nearly one-fourth of respondents reported having some debt related to either their own education or that of someone else. Nearly half reported having to cut back on other spending to service the debt, and 16 percent were behind on their payments or in default. While investment in education is generally rewarded with higher lifetime earnings, respondents with such debt are mixed in their assessment of whether their investment will pay off, with quite a bit of variation by major, type of institution attended, and successful completion of their program of study. Of those who took on debt to help finance their education, respondents who attended public postsecondary institutions were more likely than respondents who attended other institutions to report that the financial benefits outweigh the financial costs they incurred.

Health-care costs were also a source of concern for some respondents. One-third of respondents said that they had foregone some form of medical treatment in the preceding year due to the treatment's expected cost. Not surprisingly, the decision not to seek treatment was more common for those without savings, those indicating that they were struggling with their finances, or those without insurance.

Overall, U.S. households seem to be generally stable, but there is substantial variation across respondents along many indicators of economic well-being. More than five years after the start of the Great Recession, a small, but significant, core of respondents continues to experience economic hardship on multiple dimensions. Moreover, a sizable fraction of respondents appear to be financially vulnerable to unexpected events such as a serious illness, unexpected expense, or job loss.

Last update: August 15, 2014

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