Recently a NBER Working Paper (#17072) was released titled “Financially Fragile Households: Evidence and Implications.”
There are various notable statistics and findings in the paper. From the abstract:
This paper examines households’ financial fragility by looking at their capacity to come up with $2,000 in 30 days. Using data from the 2009 TNS Global Economic Crisis survey, we document widespread financial weakness in the United States: Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans. If we consider the respondents who report being certain or probably not able to cope with an ordinary financial shock of this size, we find that nearly half of Americans are financially fragile.
I find this research, as summarized above, disconcerting.
In fact, it almost seems rather unbelievable, until one considers other recent data (some found in posts tagged “paycheck to paycheck” as well as a variety of others found in the “Uncategorized” Category) that seems to confirm a rather strained “financial capacity” among a substantial percentage of Americans.
Needless to say, $2000 does not “go far” with regard to many common expected and unexpected outlays, especially those concerning medical expenses.
As disconcerting as this paper’s findings are, one can only expect this “financial capacity” to further deteriorate if/when economic conditions worsen.
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1320.20 as this post is written