The latest economic data indicates a significant financial disparity between renters and homeowners.

Since the start of the pandemic, rents have surged by more than 20%, with renters now paying about $370 more each month on average. A Fed report found nearly 1 in 5 renters (19%) fell behind on their rent at some point in 2023, up from 17% in 2022. Renters are also more likely to miss payments on utility and communication bills, even when accounting for income levels.

The financial strain is exacerbated by the fact rent consumes a large portion of income, leaving little for other expenses and creating anxiety. This insecurity persists despite an overall healthy economy.

While renters face increased economic challenges, homeowners generally have more favorable financial situations. Many benefited from buying and/or refinancing before and during the pandemic, when mortgage rates were comparatively historic lows.

About one-third refinanced in 2020 or 2021, when mortgage rates were 4% or lower, saving approximately $220 per month on average. With predictable monthly payments, they have more disposable income.

Almost all homeowners are also experiencing record levels of equity from rising home prices. Accessed through refinancing or home equity loans, equity can be tapped to pay expenses, whether planned, unplanned or discretionary.

This divide between renters and homeowners complicates the Federal Reserve's efforts to curb inflation, as homeowners bolster consumer prices with their increased discretionary spending power.

Overall, Americans financial well-being remained relatively stable in 2023, with 72% of respondents “doing okay” or “living comfortably,” amid a fairly robust labor market. This figure is slightly down from 73% in 2022 and the peak of 78% in 2021.

Opportunities for job advancements and pay increases also mirrored 2022 figures, with 33% of adults receiving a raise and 13% asking for one.

Homeowners are not immune to economic pressures. Home insurance costs are soaring, and monthly mortgage payments have swelled by more than 30% for newer homeowners.

Higher prices remain the major concern for Americans, with 65% saying it worsened their financial situation, and 19% said it made things much worse.

Consumers grew more confident in July believing inflation will ease in coming years, according to a New York Federal Reserve survey. Respondents expect inflation to drop to 2.3% by the end of 2026, the lowest since the survey began in 2013.