Parents with young children saw their financial situation decline significantly last year, according to the Federal Reserve's annual comprehensive survey of U.S. household finances, released last week.
The Household Economics and Decision-Making Survey found that the proportion of parents living with children under 18 who feel financially secure is falling from 69% in 2022 to 64% in 2023. This is also down from a record high of 75% in 2021.
The current figure is the lowest recorded since 2015, according to Fed survey data.
The Fed did not say specifically why sentiment among those surveyed had dropped so dramatically, but noted that monthly child care costs facing some families have risen to almost the same amount as rent.
Experts say this is the result of two major recent events that have left many American families' finances unstable: the expiration of the pandemic-era expanded child tax credit (which provided some families with monthly payments of up to $250 per older child and $300 per toddler) and the end of support for child care organizations.
These two changes began in 2022.
According to Columbia University's Center on Poverty and Social Policy, since the tax credit expired, “many families with children have experienced a reversal of fortune….Lower disposable income, increased poverty, food insecurity, and financial strain have become ongoing challenges for families across the country.”
Ismael Cid Martinez, an economist at the left-leaning Economic Policy Institute think tank, said the impacts are clear: Fewer parents say they could afford $400 in an emergency, and reports of food insecurity are on the rise.
Sid Martinez said that after 2021, “parents' savings started to dwindle.”
Another important pandemic response program was increased funding for childcare facilities, which also expired without being renewed.
Except in a few states, most child care facilities were forced to raise fees or close down.
This was known as the “parenting cliff.”
About 1,800 child care programs are expected to close in North Carolina, according to a projection from the liberal think tank, the Century Foundation.
Julie Cashen, a senior fellow and director of women's economic justice at the foundation, said resistance from Republican lawmakers who want to cut the federal budget makes it unlikely any relief will come from Washington to address the issue.
“One lawmaker said subsidizing child care is like subsidizing a golden retriever,” Cashen said, “but then the question always becomes, 'How are we going to pay for it?'”
“At least it's okay.”
Overall, the Federal Reserve survey found that the financial well-being of most Americans will be slightly worse in 2023, with 72% saying they are “at least OK” financially. That's down from 73% in 2022 and a post-pandemic high of 78% in 2021. That percentage hasn't been this low since 2016.
Inflation remains the biggest complaint among respondents, with the number of people worried about high prices increasing from 33% to 35% – a big change from 2016, when the question was last asked, when only 8% cited inflation as a concern.
The survey continues to show that a significant percentage of Americans are not affected at all by any economic worries, with 31% saying “not at all” when asked about the main challenges they face — up from 28% in 2022 but down from 53% in 2016.
President Joe Biden knows inflation is a top concern for voters and has called on retailers to lower prices, and Target appeared to respond this week by announcing plans to cut prices on 5,000 everyday items.
But a new NBC News poll found that more voters trust Donald Trump than Biden when it comes to tackling inflation and the cost of living, even though many economists say Trump's proposals to address the situation would probably lead to higher prices.
