If some sort of emergency were to happen, would you be able to raise $400 to cover it?
If you said yes, then you’re doing better than 52% of the country’s population.
This is all according to a report released last week by the Federal Reserve.
The “Report on the Economic Well-Being of U.S. Households” paints a grim picture that stands in stark contrast to the economic recovery that Washington and Wall Street are telling us is in progress.
The entire thing can be read here, but the key findings are what really speak volumes when it comes to what we’re being told versus the reality many Americans face following the recession of 2008.
Among the highlights:
- Only 30% of respondents to the survey that helped build this report said they were doing better than before the recession, while 34% said they were doing the same and 34% said they were doing worse.
- The average education debt was $27,840 and 24% of respondents reported having some sort of education-related debt.
- 34% went without some type of medical care simply because it was unaffordable.
- Almost half of the respondents haven’t planned for retirement.
- 31% had no retirement savings or pension.
There was some good news in housing; namely the fact that very few homeowners predicted a decline in pricing for homes in their neighborhoods. Still, 45% of respondents said that the value of their home is lower than it was in 2008.
So where’s the disconnect?
Why do we keep hearing that things are getting better when it doesn’t seem that way for many people?
A Recovery, but not a Resurgence
In June of this year, it was stated that all of the jobs lost to the recession had finally been recovered. Our politicians are likely patting themselves on the back for a job well done as a result. They don’t let the fact that recovered wages don’t match up with what they once were get in the way.
Behind this recovery is a larger glut of people working in low wage, unskilled jobs like food service. A lot of the jobs lost in the recession were in areas like construction and manufacturing, which paid significantly better. The fact that these jobs paid better meant that people who worked them had more disposable income to fuel our consumer-driven economy. Now, as the statistics from the Fed’s report show, many of those same people are struggling just to get by.
But that’s okay, because “Employment Back to Pre-Recession Levels” makes for a nice headline regardless of the reason why.
We’re increasingly seeing a trend where corporate leaders value huge profits right away over the kind of long-term viability that our economy truly needs in order to get back to its full strength. The fact that profit often comes at the expense of the wages of those who play a large part in keeping the economy going is seen as inconsequential.
At best, this will only continue the stagnation that many argue our country is seeing right now. At worst, it could lead right back to square one circa 2008.
An honestly, it’s not hard to see things getting worse before they get better. In the coming years, many baby boomers will begin retiring and will have less to spend as a result. The younger workers replacing them will be entering a market of low wages and scarce opportunity in many sectors.
This will inevitably lock them out of housing and other big-ticket purchases that are used to measure the health of a consumer driven economy. Growing wages is, of course, one way to keep this from happening, but the myth that this will make things worse is a prevalent one that holds back substantial change.
Despite the headlines and reassurances that things are getting better, there’s evidence to the contrary. With the odds stacked against you, it’s going to be up to you to protect your personal wealth and get ahead on your own.
Keep your eyes open,
Ryan Stancil
