For Americans, 2021 offered the healthiest finances in 8 years | USA News®

By CHRISTOPHER RUGABER, AP Business Writer

WASHINGTON (AP) — Americans’ financial health hit its highest level in nearly a decade last year, the Federal Reserve said Monday, boosted by a strong job market and government support payments.

Nearly eight in 10 adults said last fall that they were “doing well or living comfortably” when it comes to their finances in 2021, according to an annual Fed survey, the highest proportion to say so since the start. of the survey in 2013.

The survey of 11,000 adults was carried out last October and November, when inflation had exceeded 6% year-on-year, although before Russia’s invasion of Ukraine, the gasoline and food prices have risen sharply. The Fed did not ask any specific questions about the impact of inflation on the financial situation of Americans.

The report found that members of all racial groups reported healthier finances, with Hispanics showing the greatest improvement and whites the least.

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Nearly seven in 10 said they could afford an unexpected expense of $400 in cash or its equivalent, the highest since 2013. Yet 11% said they would be unable to afford it at all.

People with children also reported a big increase in their financial well-being, with three-quarters saying they were doing “at least well” financially, up eight percentage points from 2020 and four points from the previous year. above 2019, before the pandemic.

The boost for parents likely reflects the reopening of schools, Fed officials said, allowing more parents to work and reducing their childcare expenses. The expansion of the child tax credit, included in President Joe Biden’s $1.9 trillion financial relief package, was also likely a big factor, Fed officials said.

Low-income parents reported the biggest increases in their financial health. For those earning less than $25,000, the proportion who said they were doing at least well rose from 40% to 53%.

The expanded child tax credit included monthly payments of up to $300 per child to most parents. High-income parents said they mostly saved money, while for those with incomes below $50,000, three in 10 said they spent most of it on housing, while 15 % said most of it went to food.

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