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%.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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.
RELATED CONTENT
-
Focus on These Five Critical Areas in Retirement PlanningWorried about how you'll pay for your retirement? It can help to structure your finances around five key areas: taxes, income, medical, legacy and investments.
-
Is Downsizing Right for Your Retirement?The lower costs of a smaller home in retirement might sound appealing, but be ready for the trade-offs that come with making this big decision.
-
The Minimum Savings You Need To Retire in All 50 StatesAre you concerned you haven't saved enough for retirement? Here are the average annual expenses and minimum savings amounts needed to get by in all 50 states.
-
Three Tips for Managing Your Election-Related StressAs Election Day approaches fast, consider taking some steps to keep your anxiety and expectations under control.
-
Your Kid Is a New Driver: Will Your Car Insurance Take a Hit?Most likely, but you can try to lessen the blow by asking about discounts and teaching your child as much as you can before they get their license.Karl
-
Honda Recalls 720k Vehicles Over Risk of Fuel LeaksFollowing the Honda recall over a steering issue earlier this year, the carmaker has announced measures to find and replace faulty fuel pumps in some of its most popular models.
-
Seven Financial Mistakes to Avoid in DivorceFrom overlooking hidden assets to scary tax surprises, help protect your financial future by steering clear of these common pitfalls during the divorce process.
-
How an Irrevocable Trust Could Pay for EducationAn education trust can be set up for one person or multiple people, and the trust maker decides how the money should be used and at what age.
-
How to Maximize Your Credit Card RewardsYour cash back, points or miles may be worth hundreds — or even thousands — of dollars each year, if you know the best ways to earn and use them.
-
How to Change Financial AdvisersBefore firing your financial adviser, here are a few things to prepare for.
