How Many Americans Are Liquid Asset Poor?
More than five years after the beginning of the credit crisis and Great Recession, many American families are still financially vulnerable. Major economic indicators have made slow progress, but nearly half of households in the United States are liquid asset poor.
The number of people who do not have a personal financial safety net hasn’t improved in recent years. In fact, 44 percent of American households have less than three months worth of savings, and are unable to cover an unforeseen expense without going deeper into debt, according to a new report from the Corporation for Enterprise Development. Making matters worse, the 56 percent of consumers who have subprime credit scores may turn to a predatory loan to cover a financial emergency — prolonging the vicious debt cycle and insecurity.
“As millions of Americans today struggle to save for emergencies, investing in their futures is increasingly out of reach,” explains the report. “Flagging homeownership rates, declining retirement savings, and increasing college debt all contribute to the worst wealth inequality in generations. Without improved policies at all levels of government that help families earn more, save more, and build assets, the yawning income and wealth inequality gap in the United States will widen rather than narrow. Inaction consigns millions to persistent financial insecurity, dimming their economic future and the future of the nation as a whole.”