Almost 40% Of Americans Would Struggle To Cover A $400 Emergency

Ted

FYI: Many U.S. households find themselves in a fragile position financially, even in an economy with an unemployment rate near a 50-year low, according to a Federal Reserve survey.

The Fed’s 2018 report on the economic well-being of households, published Thursday, indicated “most measures” of well-being and financial resilience “were similar to, or slightly better than, those in 2017.” The slight improvement coincided with a decline in the average unemployment rate to 3.9% last year, from 4.3% in 2017.
Regards,
Ted
https://www.fa-mag.com/news/almost-40--of-americans-would-struggle-to-cover-a--400-emergency-45065.html?print

sfnative

I read another take on this survey in the Washington Post. It helped remind me that I live in an affluent bubble. Do I know anyone who couldn't come up with $400 in an emergency?

Old_Joe

@sfnative- In this neck of the woods going to Safeway or Costco without at least $100 is an emergency. To say nothing of two people going to any typical restaurant.

johnN

Credit-cards, - - greatest gifts from...

catch22

@johnN
Credit cards................would you please explain ?????
I'm not finding much knowledge from your statement.

msf

The dividing line is between those who could come up with $400, including using a CC and paying it off completely, and those who have to beg, borrow, or steal to cover an emergency.

I agree with @sfnative, that figures like these help remind us that so many people live paycheck to paycheck.

There will always be those who try to slough off such statistics. Cato tries to do this by pointing out that one of the questions asked people whether they would (not were able to) pay the $400 bill "out of savings (or checking) if they wanted to."
https://www.cato.org/blog/it-true-40-americans-cant-handle-400-emergency-expense-0

But Cato makes two errors. The minor one is that it cites last year's survey results, not the current results, dated May 2019.

The more serious error is that, unlike the Fed, it ignores the fact that "Even without an unexpected expense, 17 percent of adults expected to forgo payment on some of their bill in the month of the survey." Add to that the fact that "Another 12 percent of adults would be unable to pay their current month's bills if they also had an unexpected $400 expense that they had to pay. Altogether, 3 in 10 adults are either unable to pay their bills or are one modest financial setback away from hardship."
https://www.federalreserve.gov/publications/files/2018-report-economic-well-being-us-households-201905.pdf (p. 21, pdf p. 29)

Think about that. Not that people wouldn't pay their bills, but that they couldn't. Even with borrowing.

There's a lot of interesting data in the Fed's report people's economic well being that goes well beyond whether people can handle an unexpected $400 expense.

JoeD

https://www.marketwatch.com/story/the-richest-10-of-households-now-represent-70-of-all-us-wealth-2019-05-24?siteid=rss&rss=1


Meanwhile, the share of top 1% wealthiest increased to nearly 32% in 2018 from 23% in 1989.
I wonder how this can continue.

Old_Joe

Yes, I've been wondering about that for quite some time now. Especially with all of those hundreds of thousands of guns out there thanks to the NRA.

hank

sfnative said:

I read another take on this survey ... It helped remind me that I live in an affluent bubble.

You’ve got me wondering how many “homeless” even visit a board like this?

Crash

Economic injustice is rampant, perhaps worse than in the Gilded Age. Yet, the monetary, financial ignorance out there is huge. Teens AND most adults never have had the most basic lessons in how NOT to go "from paycheck to paycheck."

Old_Joe

Autocracy thrives on ignorance.