Why Many American Families Feel Financially Insecure Going Into 2024 (2024)

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Why Many American Families Feel Financially Insecure Going Into 2024? ›

Inflation, high interest rates, a rocky job market, and the COVID-19 pandemic—they all have American adults feeling more anxious about money, with more people saying they're the least secure about their finances in over a decade.

Feelings of financial insecurity among Americans have reached their highest point in at least a decade. A third of American adults in Northwestern Mutual's 2024 Planning & Progress survey said they don't feel financially secure. That's up from 27% in 2023 and the highest measure going back to 2012.

Most Americans Are Still Struggling Post COVID-19

At the same time, the bottom 40% of households experienced an 8% drop in their savings, while the middle class, which makes up the next 40%, has seen their cash savings fall below pre-COVID levels in the last quarter.

According to a recent CNN survey, 71% of Americans identify money as a significant cause of stress in their lives. Further, 76% of households live paycheck-to-paycheck and credit card debt is growing.

Current Financial Situation. At the end of 2022, 73 percent of adults were doing at least okay financially, meaning they reported either "doing okay" financially (39 percent) or "living comfortably" (34 percent).

Key Takeaways. S&P Global Ratings expects U.S. real GDP growth of 2.5% in 2024 as the labor market remains sturdy. We continue to expect the economy to transition to slightly below-potential growth in the next couple of years.

Economic growth is projected to slow in 2024 amid increased unemployment and lower inflation. CBO expects the Federal Reserve to respond by reducing interest rates, starting in the middle of the year. In CBO's projections, economic growth rebounds in 2025 and then moderates in later years.

After inflation, high interest rates, unattainable housing prices and other economic factors, 50 percent of U.S. adults say their overall personal financial situation is worse than it was in November 2020, according to October 2023 Bankrate polling.

About 3 in 10 Americans say they've foregone a major purchase because of higher interest rates in the last year. Nearly 1 in 4 U.S. adults have student debt, with the pandemic-era payment pause on federal loans ending this month, contributing to the crunch.

The survey also found that 37% of Americans are behind on monthly bills, which jumps to 53% among parents with young children. Additionally, 61% reported that inflation has impacted their ability to afford their lifestyle. "Yes, inflation seems to have peaked, but it hasn't gone away," Schulz continued.

How many Americans are living paycheck to paycheck? ›

A majority, 65%, say they live paycheck to paycheck, according to CNBC and SurveyMonkey's recent Your Money International Financial Security Survey, which polled 498 U.S. adults. That's a slight increase from last year's results, which found that 58% of Americans considered themselves to be living paycheck to paycheck.

Trend from 2022 to 2023 in percentage of U.S. adults reporting they have enough money to live comfortably. This has varied between a high of 73% in 2007 to a low of 60% in 2012. It is 64% in the latest reading, in April 2023.

By the numbers: 63% of Americans rate their current financial situation as being "good," including 19% of us who say it's "very good." Neither number is particularly low: They're both entirely in line with the average result the past 20 times Harris Poll has asked this question.

Around 23% of Americans are debt free, according to the most recent data available from the Federal Reserve. That figure factors in every type of debt, from credit card balances and student loans to mortgages, car loans and more.

The median household income in the U.S. is just under $75,000, so it makes sense that the largest proportion of those surveyed (45%) said that it's possible to be financially stable by earning between $50,000 and $100,000 a year.

As of May 2023, more than 1 in 5 Americans have no emergency savings. Nearly one in three (30 percent) people in 2023 had some emergency savings, but not enough to cover three months of expenses. This is up from 27 percent of people in 2022.

U.S. real GDP growth on an annual average basis will be 2.3 percent in 2024, 1.5 percent in 2025, and 2.2 percent in 2026. National job growth will weaken sharply to only 35,000 monthly gains in the second half of 2024, rebounding to 115,000 job gains by late 2025 as aggressive Fed rate cuts spur investment spending.

According to Wang and Tyler, the economic data should "give more confidence that the US economy is recovering in additional sectors" and that "recession fears for 2024 are likely to be pushed into 2025."

With elevated interest rates and no significant revenue-raising reform in sight, the federal deficit hovers around 6.0 percent over our forecast horizon, reaching 6.2 percent of GDP in fiscal 2024 and edging down to 5.9 percent in fiscal 2025.

The economic data should “give more confidence that the US economy is recovering in additional sectors and recession fears for 2024 are likely to be pushed into 2025”, it noted. This means that if there was a potential recession it is pushed back to 2025 because of the solid manufacturing data.