The Consumer Financial Protection Bureau (CFPB) has released a new ‘Making Ends Meet’ report covering the financial health of American households. Since 2019, the annual Making Ends Meet consumer surveys showed improvement in financial health during the first few years of the Covid pandemic, due in part to a tight labour market, reductions in consumer spending, and access to pandemic-related relief programmes. However, data from early 2022 revealed a decline in several key measures, as well as a rapid deterioration in financial health for Hispanic consumers, consumers under the age of 40, and low-income renters.
In addition, while unemployment remains low, more than 37% of households were unable to cover expenses for longer than one month if they lost their main source of income. Utilizing data collected from the survey, as well as from the CFPB’s Consumer Credit Panel, the report focused on several measures of consumer financial health.
Nearly 37% of households report that they could not cover expenses for longer than one month, even with accessing savings, borrowing money, selling assets, or seeking help from family and friends. The report also finds that, in 2022, one in eight households also experienced lost income from unemployment or reduction in work hours, and roughly one-third of households experienced a major unexpected expense, including vehicle repair, unexpected medical expense, or a household repair.
Income variability
The report discusses how consumers also faced frequent income uncertainties, as income variability increased sharply from 2021 to 2022. The increase was particularly large for Hispanic consumers and consumers under age 40. Also, while racial and ethnic groups applied for credit at similar rates, Black and Hispanic consumers were more likely to be turned down or not receive as much credit as they requested.
Among renters, 31% missed at least one rental payment in the previous year. Nearly 18% of student loan borrowers have annual incomes under $125,000 and loan balances under $10,000.
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