NEW YORK (TheStreet) -- Would you be able to handle an emergency expense of $400 without using a credit card? Forty-seven percent of people U.S. households said no, according to a report the Fed released on Wednesday.
The Fed's annual Survey of Household Economics and Decision-making, SHED, gives a glimpse of the financial status of U.S. households. This year, the central bank received responses from 5,896 households, some of whom participated in the survey last year as well.
"Although the survey finds that economic hardships are common, many individuals are ill-prepared for a financial disruption and would struggle to cover emergency expenses," the report noted. About 31% of respondents reported going without some form of medical care in the previous year because they couldn't afford it.
The Fed uses the assessment to provide a more qualitative gauge of the economy, tracking sentiment not thoroughly gauged by data points such as new-home construction and the consumer price index. Its findings may also hold a key to when and how the Fed raises interest rates, which were cut to around zero during the 2008 financial crisis.
While the Fed had previously said it was looking for unemployment to be below 6.5% and inflation to be above 2% before raising rates, Fed Chair Janet Yellen has recently stressed that the Fed will be looking at a variety of data to confirm whether the economy is truly on track.
As of April, the unemployment rate was 5.4%. Meanwhile, inflation, measured by personal consumption expenditures (PCE), was 1.3% in March.