A survey by the US Federal Reserve revealed that 40% of Americans cannot cover an emergency expense of $400.
The Fed’s “Report on the Economic Well-Being of U.S. Households in 2017” found that 4 out of every 10 adults in the US would not be able to cover an unexpected $400 expense or would have to resort to borrowing money or selling something to cover it.
This is an improvement from 2013, when half of adults said they would be unable to cover such an expense.
While more Americans feel like they have more financial security compared to five years ago, the new federal data released on Tuesday suggests that many Americans continue to struggle with setting aside savings.
According to the survey of 12,000 people in November and December, 74 percent of US adults said that they were doing “okay” financially or living comfortably, a four percent increase than the previous year and 10 percent higher than in 2013.
Well-being was lower for racial and ethnic minorities and those with less educational attainment.
The report also revealed that less than 40% of non-retired US adults believe their retirement savings are on track, while a quarter of respondents said they had no retirement savings whatsoever.
For the first time the report also looked at how the opioid crisis affects Americans. The report found that one in five Americans knew someone who was addicted to opioids or painkillers.
Commenting on the report, Federal Reserve Board Governor Lael Brainard said in a press release:
“This year’s survey finds that rising levels of employment are translating into improved financial conditions for many but not all Americans, with one third now reporting they are living comfortably and another 40 percent reporting they are doing ok financially.
“Even with the improvement in financial outlook, however, 40 percent still say they cannot cover a $400 emergency expense, or would do so by borrowing or selling something. We learned that about one in five adults knows someone with addiction to opioids or painkillers; whites are about twice as likely to have such exposure as blacks and Hispanics; and exposure does not vary much by education level or by local economic conditions.”
