Americans are more hopeful about their financial situations these days than they have been since 2020 and expect to be even better off a year from now, according to a new survey.
“The percentage of respondents expecting to be financially the same or better off 12 months from now is 76.5%, its highest level since September 2021,” according to the January Survey of Consumer Expectations, released this week by the Federal Reserve Bank of New York’s Center for Microeconomic Data.
That's a vast improvement compared to February 2020, when that number was 42.9%. In April 2020, it was a staggering 26.6%.
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The survey of a rotating panel of approximately 1,300 household heads looked at inflation, labor markets and household finance.
Other findings showed that income growth expectations for households rose to 3.1% last month, remaining above the 2.7% recorded in February 2020 before the pandemic. It also found that more people believe that access to credit is easier now than it was a year ago and their expectation of future access to credit also improved.
The report supports a December 2023 study finding that household wealth increased during the pandemic. However, a large disparity in that wealth still exists between the nation’s richest and poorest people, the December study showed.
Inflation continues to rise
The Fed's January survey also showed that people are uncertain about inflation going forward.
A recent Kiplinger report shows that higher prices for housing and transportation contributed to hotter-than-expected inflation in January. On an annual basis, headline inflation rose 3.1% versus the expected 2.9%, according to the report. Housing contributed a great deal, rising to 0.6% in January from 0.4% in December.
How to protect your financial future
As the economy continues to recover from the impact of the COVID-19 pandemic, there are plenty of steps you can take to control spending and grow your savings. They include creating an emergency fund, negotiating payments with your credit card companies if you have debt and reassessing your budget to identify necessities.
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