Fewer than one-third of Americans report being better off financially than they were five years ago, with weak household savings and hefty debt burdens holding back large segments of the economy, according to a new Federal Reserve survey.
Just 30 percent of survey respondents described themselves as better off than they were in 2008, with 34 percent saying they were doing about the same and 34 percent saying they were worse off.
The results of the nationwide survey, which the Fed conducted last September, highlight the degree to which Americans continue to fight financial headwinds several years after Wall Street excess drove the economy into the most punishing recession since the Great Depression. Although the national unemployment rate has been steadily declining since late 2009 amid modest economic growth and booming financial markets, large swaths of the nation have not shared in those gains — presenting a challenge for policymakers hoping to jump-start the recovery.
Some 77 percent of respondents said they either didn’t expect a raise in the next 12 months or expected their income to decline. About 30 percent of Americans said their household income for 2012 was lower than what they’d expect in a normal year.
“Large-scale financial strain at the household level ultimately fed into broader economic challenges for the country,” the report said, “and the completion of the national recovery will ultimately be, in part, a reflection of the well-being of households and consumers.”
The Fed survey, the first of its kind, is meant to provide Washington policymakers with a better understanding of how households view their own balance sheets. The central bank is responsible for keeping a lid on prices, maximizing employment and maintaining the stability of the nation’s financial system.
Among the emerging risks spotlighted by the survey is the nation’s $1.3 trillion in unpaid student debt, suggesting that high levels of student debt are crimping the broader economy. Nearly half of Americans said they had to curb their spending last year in order to make payments on student loans, adding weight to the fear among federal financial regulators that the burden of student debt on households will depress economic growth for years to come. [ … ]
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