Americans are finding it increasingly difficult to handle unexpected expenses, according to a February survey by the New York Federal Reserve. Only 62.7% of respondents said they could come up with $2,000 within a month if necessary — the lowest share recorded since the Fed began tracking this measure in 2015.
The problem is compounded by rising prices: inflation has pushed consumer costs roughly 35% higher since 2015. Although recent inflation readings were modestly better than many analysts expected, some experts warn that tariffs proposed by the Trump administration could raise prices again later this year. Federal Reserve Chair Jerome Powell acknowledged that tariffs are already contributing to higher inflation, though he expressed the view that the effect might be temporary.
Signs of financial strain are visible in retail sales. Walmart’s CEO has reported customers are opting for smaller package sizes and, in some cases, running out of money before the end of the month. Dick’s Sporting Goods also reported softer sales during the early part of 2023, indicating that tighter household budgets may be curbing discretionary spending.
Taken together, these indicators suggest many households remain vulnerable to shocks. With a declining share of people able to assemble a $2,000 emergency fund and continued price pressure, economists and policymakers face a challenging environment as they assess monetary policy and fiscal measures to support household balance sheets.