Federal Survey: Economic Well-Being of U.S. Households in 2023

May 2024

Executive Summary

Results from the 2023 Survey of Household Economics and Decisionmaking (SHED) indicate that people’s overall financial well-being was nearly unchanged from the previous year but below the high reached in 2021.1 Despite the moderating pace of inflation, many adults continued to indicate that higher prices were a challenge in managing their finances.

The survey, which was fielded in October 2023, showed similar patterns for other measures of financial resiliency as well. Both the share of adults who spent less than their income in the month before the survey and the share who would pay for an unexpected $400 expenses with cash or the equivalent were nearly unchanged from 2022, yet both were down from 2021. Among adults who were not retired, the share who felt that their retirement savings plan was on track rose slightly from 2022, possibly reflecting stock market gains, but remained below the share who felt their retirement savings was on track in 2021.

Read more at BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

Have a tax law question?

Our #IRS Interactive Tax Assistant has answers.

Watch this short video to learn more:

https://youtu.be/y6HkaBkdKdU

The Internal Revenue Service issued a consumer alert today following ongoing concerns about a series of tax scams and inaccurate social media advice that led thousands of taxpayers to file inflated refund claims during the past tax season.

• In this email will find Ready-to-use article and link on IRS News Release 2024-139, Consumer alert: IRS warns taxpayers they may be scam victims if they filed for big refunds; misleading advice leads to false claims for Fuel Tax Credit, Sick and Family Leave Credit, Household Employment taxes.

Jose L. Santiago

Public Affairs Specialist

Tax Outreach, Partnership and Education

Email: jose.l.santiago@irs.gov

CFPB to define Buy Now, Pay Later providers as credit card providers

The Consumer Financial Protection Bureau today issued an interpretive rule to define lenders who provide buy now, pay later products as credit card providers under the Truth in Lending Act. As a result, BNPL lenders will be required to provide consumers with options currently available to credit card holders, such as the ability to dispute merchant charges through the creditor.

In a statement, CFPB said the BNPL industry has expanded rapidly in recent years. (A Federal Reserve survey released Tuesday found that 14% of U.S. adults last year said they had used a BNPL product in the past 12 months.) Like conventional credit cards, BNPL combines payment processing and credit services, while charging transaction fees to merchants, the bureau said. “Because BNPL lenders will typically meet criteria under existing law and regulation as traditional credit card providers, they need to extend many of the same rights and protections as classic credit card providers.”

Read more at American Bankers Association

Read more at Consumer Financial Protection Bureau

Americans are going into debt to buy groceries. Here’s why those balances can be difficult to pay down

KEY POINTS

• Americans have been grappling with higher food costs since 2021.
• To get relief, some are turning to credit cards, buy now, pay later programs or payday loans.
• But those balances can be difficult to pay down due to a higher cost of living.

Many shoppers have been shocked by what they pay at the grocery store checkout.

Food prices shot up amid broader inflation in recent years, and remain high for many staples.

As consumers struggle with elevated food costs that can lead to unpaid debt balances.

Read more at CNBC

Supreme Court Upholds Consumer Finance Protection Bureau Funding Method

The way the agency--a target of a conservative attacks--gets money from the federal government does not violate the Constitution, the court rules in a 7-2 vote.

The Supreme Court on Thursday rejected a conservative-led attack that could have undermined the Consumer Financial Protection Bureau.

The justices ruled 7-2 that the way the CFPB is funded does not violate the Constitution, reversing a lower court and drawing praise from consumers. Justice Clarence Thomas wrote the majority opinion, splitting with his frequent allies, Justices Samuel Alito and Neil Gorsuch, who dissented.

The CFPB was created after the 2008 financial crisis to regulate mortgages, car loans and other consumer finance. The case was brought by payday lenders who object to a bureau rule that limits their ability to withdraw funds directly from borrowers' bank accounts. It's among several major challenges to federal regulatory agencies on the docket this term for a court that has for more than a decade been open to limits on their operations.

Read more at INC.com

How Much the Average Middle-Class Person Owes in Credit Card Debt

Many of us are taught that debt is bad and should be avoided. However, if managed properly, some types of debt can be advantageous. For instance, debt that may improve a person’s net worth or financial position can be considered “good debt.” However, any debt that’s difficult to repay or offers no long-term benefits is typically called “bad debt”.

When it comes to bad debt, several types, like high-interest or payday loans, are difficult to repay and can worsen your financial situation. And then there’s credit card debt, which plagues a large percentage of the American population.

Credit Card Debt Statistics

Credit card debt is arguably the worst type of debt and the biggest threat to building wealth. With high interest rates and low minimum payments, you could pay on your balances for a significant part of your life.

Read more at GOBankingRates

From Checking to Savings to Lending, Platforms Pave Digital Path to Financial Wellness

Q1 Earnings Show Lending Platforms’ Digital Path to Financial Wellness

Over the last several months, PYMNTS Intelligence data has revealed in separate reports that tens of millions of consumers would opt for a single point of access to manage banking and spending — through an everyday app.

They’re using a number of digital conduits to gain a holistic view of spending and saving, budgeting their daily cash and credit outlays, including digital wallets. As PYMNTS reported earlier this year, digital wallet users spend 31% more across a range of everyday purchases than those who do not use digital wallets.

For platforms such as SoFi, LendingClub and Block that marry spending, savings and lending products and services ­— sometimes with a bona fide bank embedded in operations — the flow of cross-pollination opportunities can help improve financial wellness while building self-contained ecosystems.

Read more at PYMNTS.COM

Survey: Consumers still seeking ways to improve finances

Nearly half of American workers feel “financially well,” an increase from last year, according to a new survey.

Bank of America’s 14th annual Workplace Benefits Report found that 47% of American workers feel they are doing well financially compared to 42% at this time last year. The report also found that 53% of employees are concerned that economic uncertainty will affect their long-term retirement savings, down from 63% in 2023.

More than half (53%) of men reported positive financial wellness compared to 36% of women. In addition, employees expressed concern about inflation, with 76% of workers saying that the cost of living is outpacing growth in their salary or wages, compared to 67% in June 2023.

Read more at CHAINSTOREAGE

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Costly Financial Ignorance: CATO Institute

The public’s failure to understand monetary policy encourages price controls and other misguided inflation “solutions.”

“Greedflation.” “Shrinkflation.” “Junk fees.” “Price gouging.” “Monopoly power.” Barely a week goes by without President Biden or some other politician slamming companies for the prices they charge.

It’s not surprising. We’ve just experienced the first major burst of inflation since the early 1980s. American families are angry that grocery prices rose 21 percent in three years after January 2021, as interest rates for new mortgages and auto loans have surged. Politicians and central bankers have every incentive to blame external forces or greedy businesses, rather than their own macroeconomic stimulus, for these consequences of inflation.

Depressingly, the buck‐​passing is working. The public sees profit‐​seeking corporations as inflation’s foremost villain, according to a recent YouGov survey. Even among those skeptical that corporate America suddenly colluded to jack up prices, many still mistakenly believe that today’s high prices were entirely driven by the pandemic and Vladimir Putin’s war on Ukraine.

Read more at CATO INSTITUTE