Two-thirds of Americans would have difficulty coming up with the money to cover a USD 1,000 emergency, according to an exclusive poll released today, a signal that despite years of recovery from the Great Recession, Americans' financial conditions remains precarious as ever.
These financial difficulties span all income levels, according to the poll conducted by The Associated Press-NORC Center for Public Affairs Research.
Seventy-five per cent of people in households making less than USD 50,000 a year would have difficulty coming up with USD 1,000 to cover an unexpected bill. But when income rose to between USD 50,000 and USD 100,000, the difficulty decreased only modestly to 67 per cent.
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Even for the country's wealthiest 20 per cent - households making more than USD 100,000 a year - 38 per cent say they would have at least some difficulty coming up with USD 1,000.
"The more we learn about the balance sheets of Americans, it becomes quite alarming," said Caroline Ratcliffe, a senior fellow at the Urban Institute focusing on poverty and emergency savings issues.
Harry Spangle is one of those Americans. A 66-year-old former electrician from New Jersey, Spangle said he thought he would always have a job and "lived for today" but lost his job before the downturn. He said he would have to borrow from friends or family in order to cover an unexpected $1,000 expense.
"I have a pension and I am on Social Security, but it's very limiting," he said. "It's depressing."
Having a modest, immediately available emergency fund is widely recognized as critical to financial health. Families that have even a small amount of non-retirement savings, between USD 250 and USD 749, are less likely to be evicted from their homes and less likely to need public benefits, an Urban Institute study found.
"People are extremely vulnerable if they don't have savings," Ratcliffe said. "And it's a cost to taxpayers as well. Lack of savings can lead to homelessness, or other problems."
Despite an absence of savings, two-thirds of Americans said they feel positive about their finances , according to survey data released Wednesday by AP-NORC, a sign that they're managing day-to-day expenses fine. The challenge for many often come from economic forces beyond their control such as a dip in the stock market that threatens their job or an unexpected medical bill, risks that have shattered the confidence of most in the broader US economy.
Yet when faced with an unexpected USD 1,000 bill, a majority of Americans said they wouldn't be especially likely to pay with money on hand, the AP-NORC survey found. A third said they would have to borrow from a bank or from friends and family, or put the bill on a credit card.
Thirteen per cent would skip paying other bills, and 11 per cent said they would likely not pay the bill at all.
