Dive Brief:

• Roughly three out of four U.S. adults (73%) said they are “doing okay financially” or “living comfortably” even as their view of the economy has dimmed, with 42% of survey respondents voicing concern about finding or keeping a job, the Federal Reserve said.
• More than 90% of adults identified inflation as a concern, the central bank said in a report on an annual survey, noting that price pressures persisted as their most common financial worry.
• “Fifty-eight percent [of households] said that changes in the prices they paid compared with the prior year had eroded their financial standing,” the Fed said, with 14% saying inflation had made their situation much worse.

Dive Insight:

The economic outlook has dimmed since the Fed gathered results for the survey in October, with the Iran war increasing price pressures and prompting downgrades of forecasts for growth.

“The Middle East war is expected to exert a modest but meaningful drag on near-term growth through renewed supply chain disruptions, higher shipping costs and increased uncertainty around energy and trade flows,” LPL Financial Chief Economist Jeffrey Roach said Monday.

The war will likely slow growth by 0.2 percentage point in the second quarter and by 0.3 percentage point in Q3, he said in a note.

Economists see 35% odds of a recession in the next 12 months, an increase from 32% in February and March, according to a Wolters Kluwer survey.

Inflation is casting a shadow on the outlook. A war-induced surge in energy prices last month pushed up the rate of price gains to a three-year high, with the consumer price index climbing 3.8% on an annual basis.

The cost of energy jumped 17.9% during the past year, spurred by a 28.4% increase in the price of gasoline and 54.3% gain in the price of fuel oil, the Bureau of Labor Statistics said Tuesday.

Price pressures, and declining affordability, have eroded consumer sentiments to record lows in recent months.

In turn, retail sales growth slowed to 0.5% last month from 1.6% in March as a war-induced surge in price pressures exceeded wage gains and put the price of some goods out of reach for low-income consumers. On an annual basis, sales increased 4.9%, the Census Bureau said Thursday.

Before the Iran war, 8% of adults said their family sometimes or often lacked enough food and 16% failed to pay all their bills the prior month, the Fed said, citing survey results.

Although most households said they are financially stable, some “demographic groups — including low-income, young, and Black adults — saw meaningful declines” in their financial well-being from 2024 to 2025, the central bank said.

Also, layoffs increased and adults reported fewer voluntary job quits, “indicating additional challenges for workers and job seekers,” the Fed said.

Among adults under 30, 15% were not working, with many of them saying they were unable to find a job, according to the central bank.

The Fed survey encompasses a range of factors in household economic well-being, from employment and income to credit and banking.