Fed says household finances improving, but low-income ones face tougher road

FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS/Leah Millis

(Reuters) - U.S. households were in slightly better financial shape in July than in April, as more people received aid or returned to work, but signs of lasting economic pain began to emerge, particularly for low-income households, according to a report released by the Federal Reserve on Friday.

Overall, 77% of consumers said they were doing at least okay financially, up from 72% in early April, the survey found.

The increase was likely due to more people returning to work or receiving aid from the government or from charitable organizations, researchers noted in the report, which was a supplement to the Fed’s annual Survey of Household Economics and Decisionmaking.

Some 70% of adults said in July they would be able to handle an unexpected expense of $400 by using cash, savings, or a credit card that they could pay off by the next statement. That was up from 63% last October.

However, many Americans who lost jobs during the coronavirus crisis were still out of work and faced dwindling odds of returning to their old roles. In July, some 22% of adults who had been laid off said they still were not working and did not expect to get their old jobs back, up from 7% in April.

Higher-income workers were more likely to return to their jobs after being laid off. Only 25% of laid-off people with family incomes below $40,000 went back to the jobs they once had, compared with 39% of laid-off workers with family incomes over $100,000, the report found.

Reporting by Jonnelle Marte; Editing by Paul Simao