In the August 7, 2014 post (“Thoughts Concerning The Next Financial Crisis“) I mentioned a “widespread ‘paycheck to paycheck'” situation as well as other signs indicating widespread weak financial wherewithal.
Another recently released report provides details as to the financial situation experienced by Americans. This report is the Federal Reserve report released August 7, 2014, titled “Report on the Economic Well-Being of U.S. Households in 2013.” As described in the press release:
In its new Report on the Economic Well-Being of U.S. Households, the Federal Reserve Board provides a snapshot of the self-perceived financial and economic well-being of U.S. households and the issues they face, based on responses to the Board’s 2013 Survey of Household Economics and Decisionmaking. The report provides insight into numerous topics of current relevance to household finances, including: housing and living arrangements; credit access and behavior; education and student loan debt; savings; retirement; and health expenses.
I found many of the statistics contained in the report to be disconcerting, including this excerpt seen on page 18 of the report, contained within the “Emergency Savings” section:
Respondents were asked how they would pay for an emergency expense that came along and cost $400. Just under half (48 percent) reported that they could fairly easily
handle such an expense, paying for it entirely using cash, money currently in their checking/savings account, or on a credit card that they would pay in full at their next statement. The remainder indicated that such an expense would be more challenging to
handle: respondents indicated that they simply could not cover the expense (19 percent); would have to sell something (9 percent); or would have to rely on one or more means of borrowing to pay for at least part of the expense, including paying with a credit card that they pay off over time (17 percent), borrowing from friends or family (12 percent), or using a payday loan (4 percent).
Additional details are found in the report mentioned above.
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1920.24 as this post is written