Many U.S. households remain in a precarious financial position despite unemployment falling to the lowest level in years, a new Federal Reserve survey shows.
The results of the Fed’s 2017 report on the economic well-being of U.S. households, which also explored the consequences of the opioid epidemic for the first time, found that conditions generally have improved but many groups continue to struggle.
Based on a survey of more than 12,000 people in November and December 2017, the report released May 22 showed two in five Americans don’t have enough savings to cover a $400 emergency expense, and one in four don’t feel they are “at least doing OK” financially. In December, the unemployment rate was 4.1%, and fell to 3.9% in April, marking the lowest level since 2000.
“This year’s survey finds that rising levels of employment are translating into improved financial conditions for many but not all Americans,” Fed Governor Lael Brainard said in a statement. “We learned that about one in five adults knows someone with addiction to opioids or painkillers,” she added.
Brainard and her colleagues expect the unemployment rate will decline to 3.6% in 2020, according to their median estimate in March. They are gradually raising interest rates to guide the unemployment rate back up to 4.5% over time.
That’s their estimate of what central bankers call full employment — the lowest level over the longer run that still keeps inflation in check.
The report’s authors said the findings highlight some of the problems with focusing too narrowly on measures such as the headline unemployment rate.
“Our understanding of full employment and how to measure it is a key example,” they wrote. “Many workers in the survey have a full-time job with regular hours, pay raises and good benefits. Others who are also employed describe a very different experience: fewer hours than they want to work, only a few days’ notice on work schedules and little in benefits or pay increases.”
According to the report, one in six workers faced irregular work scheduling they did not ask for, and one in 10 said they received their work schedule less than a week in advance. More than one in five said they weren’t able to pay the current month’s bills in full, and more than one in four said they skipped necessary medical care last year because they couldn’t afford it.
The Fed also surveyed households about the opioid epidemic and found that “those who have been exposed to addiction have somewhat less favorable assessments of economic conditions than those who have not been exposed.”