Federal Reserve Board data show higher prices, inflation guide consumer decisions

If it feels like prices for everyday items keep increasing, you’re not alone. According to the Federal Reserve Board’s Economic Well-Being of U.S. Households in 2023 report, higher prices continue to be a top financial concern for most Americans.

Sixty-five percent of adults said that changes in the prices they paid compared with the prior year had made their financial situation worse.

Published on May 21, the report examines the financial circumstances of U.S. adults and their families. The report, fact sheet, downloadable data, and video summary are available on the Board's website.

When taking action to reduce expenses, 62% of adults said they switched to cheaper products, 61% reported that they used less or stopped using a specific product, and 48% reported delaying major purchases.

Katelyn McCullock, AVMA chief economist and director of the Veterinary Economics Division, said, “Those are all pointing to consumers that are actively making decisions about their purchasing patterns, in a way to address higher prices. And in the microcosm of veterinary services, that's likely happening too.”

The report includes data from the 2023 Survey of Household Economics and Decisionmaking (SHED), which indicates people’s overall financial wellbeing was nearly unchanged from the previous year. During 2023, 72% of adults reported either doing OK or living comfortably financially, similar to the 73% seen in 2022.

Many respondents experienced a change in their family’s monthly income and spending from a year earlier. Thirty-four percent of adults said their family’s monthly income increased in 2023, while 38% increased their monthly expenditures.

It’s important to consider that the savings rate these families encountered may not actually have increased, even though the incomes were higher, McCullock explained.

Inflation was the most common financial challenge respondents identified. Disparities within income and demographic groups meant some people faced financial stress at a higher rate than others.

In particular, low-income respondents were more likely to face material hardships, including 17% saying that had not paid all of their bills in full the month prior to the survey. Seven percent of respondents said that members of their household sometimes or often did not have enough to eat, and 27% skipped medical care because of cost.

“If you have households delaying medical care or not able to pay bills, it is more likely discretionary spending categories are seeing reductions. This would apply to pet expenditure categories for those households,” McCullock said.