The Federal Reserve recently reported that 68% of consumers could afford a theoretical $400 emergency expense.1, 2 However, the Fed’s $400 benchmark, which they have not updated to consider inflation, is outdated. PYMNTS Intelligence’s data shows the average unexpected expense costs $1,404 — 3.5 times the Fed’s benchmark.
As of May 2024, inflation sits at 3.3%.3 The impact of inflation on specific expenses is more pronounced. Shelter, electricity and medical expenses still show higher inflation rates. The reality that these are all needs can make it more difficult for consumers to manage their finances. Especially with emergency expenses that pop up.