The economy may be good, but 40 percent of Americans would have a hard time to pay for a $400 emergency.
According to a Federal Reserve survey, 4 in 10 adults who would have more difficulty covering such an expense and 27 percent of the survey respondents would have to borrow money or sell something to cover a $400 emergency — 12% couldn’t cover it at all, Enterprise News reported.
“Based on a survey of 11,000 people in October and November 2018, the report showed a quarter of Americans don’t feel like they are doing ‘at least OK’ financially. That number was higher for Black and Hispanic Americans, at roughly one third for both. For those making less than $40,000 a year, the share who felt they weren’t doing well was 44%,” Bloomberg reported.
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“Relatively small, unexpected expenses, such as a car repair or replacing a broken appliance, can be a hardship for many families without adequate savings,” the report said. “When faced with a hypothetical expense of $400, 61% of adults in 2018 say they would cover it, using cash, savings, or a credit card paid off at the next statement.”
In a press release, Fed Governor Michelle Bowman said: “We continue to see the growing U.S. economy supporting most American families. At the same time, the survey does find differences across communities, with just over half of those living in rural areas describing their local economy as good or excellent compared to two-thirds of those living in cities. Across the country, many families continue to experience financial distress and struggle to save for retirement and unexpected expenses.”
