The Federal Reserve released its annual study of American family finances last week. It found that parents with younger children reported a big drop in their financial well-being last year.
From 69% in 2022 to 64% in 2023, the Survey of Household Economics and Decisionmaking found that the number of parents living with children under 18 who felt financially safe went down. Also, that was less than the all-time high of 75% in 2021.
Fed poll data shows that this number is the lowest it has ever been since records began in 2015.
The Federal Reserve doesn’t say exactly why people who took the survey seemed to be feeling much worse, but it does say that the cost of child care for some families has gone up to almost as much as their rent each month.
That’s because of two big events that happened recently and have thrown many American families’ finances off balance: the end of the expanded child tax credit that some families received every month for up to $250 per older child and $300 per young child during the pandemic; and the end of support for child care groups.
In 2022, both of those changes began to happen.
The Columbia University Center on Poverty and Social Policy says that since the tax credit ended, “many families with children have seen a reversal of fortune,” including less money to spend, more poverty, trouble getting food, and financial stress. This is still a problem for families across the country.
As an economist at the left-leaning Economic Policy Institute, Ismael Cid-Martinez said that the results have been clear. Not as many parents say they can get $400 in an emergency, and more of them say they have gone without food.
As of 2021, Cid-Martinez said, “parents’ savings started to go down.”
Child care centers got more money through another important pandemic scheme. That support has also stopped and has not been brought back.
Only a few states didn’t have to do this, but most child care centers had to either raise their prices or shut down.
It was called the “child care cliff.”
A report from the relatively liberal Century Foundation think tank said that in North Carolina, almost 1,800 child care services would have to close.
At the foundation, Julie Kashen is a senior fellow and the director for women’s economic justice. She said that any help from Washington to solve the problem is now unlikely because Republicans in Congress want to cut the government budget.
Kashen said, “One lawmaker said that supporting child care is like supporting golden retrievers.” “But then the question is always, ‘How are we going to pay for it?'”
According to the Fed poll, most Americans’ financial situation got a little worse in 2023. Only 72% of Americans said they were “at least doing okay” financially, which is less than the high point of 78% in 2021 after the pandemic. Since 2016, the number hasn’t been that low.
People who answered the survey were still most upset about inflation, but their worry about high prices rose from 33% to 35%. That’s more than the 8% who said inflation was a worry in 2016, the last time that question was asked.
Another finding from the poll was that a lot of Americans still don’t have to worry about money. In fact, 31% of those asked what their biggest problems are said “none.” That’s more than the 28% that was there in 2022, but less than the 53% that was there in 2016.
President Joe Biden knows that inflation is still a big issue for voters and has asked stores to lower their prices. When Target said this week that it would be lowering the prices of 5,000 everyday things, it seemed like they listened.
