According to the Washington Post, not all Americans agree that the economy is as strong as some make it out to be. While the stock market continues to report record highs, a weak expanse and shaky growth cycle have many Americans continuing to struggle to pay the bills.
Nearly 60 percent of Americans have benefited from an economic recovery while 40 percent are still waiting for their piece of the American pie.
Matthew Mish, head of credit strategy at UBS, points out “This is a two-tier recovery.” Mish refers to the 40 percent as “the lower tier”. The lower tier is often people who don’t own their own homes or have investments to strengthen their financial portfolio. Meanwhile, their wages have been stunted while housing expenses, healthcare, and education costs continue to rise. Their debt levels are also out of control.
When a sampling of 30 financially-struggling Americans was asked about their situation, patterns became evident. Most did okay financially until a major crisis arose, such as an illness, a loss of a job, or another unforeseen event. Once a hardship develops for these Americans, many lag behind on bills, making it hard for them to recover.
Some economists say more Americans are at risk if the economy should experience even a mild bump. In that case, some say the next recession could be the worse one since the Great Recession.
Signe-Mary McKernan, vice president of the Center on Labor, Human Services and Population at the Urban Institute notes that many Americans live paycheck to paycheck. “We are headed towards a political crisis, if not an economic one”, she said.
Multiple factors leave this segment of the population vulnerable. According to the Federal Reserve, many still haven’t recovered from the 2008 recession. Most don’t have any money put away in the event of an emergency.
The lower half is also less healthy, financially, when you account for inflation. Wages have grown for some recently, but it’ll take time for it to catch them up. For many, however, setbacks are common and continue to get them further into debt.
More than a third of Americans make less than $15 an hour, while half of job positions pay less than $18.5 hourly. At those pay rates, it’s hard for Americans to save or invest for their future.
According to a quarterly survey by UBS, four out of 10 Americans say they’re struggling to pay bills. Many are borrowing more money and are caught up in a cycle of debt. According to the Federal Reserve Bank of New York, the total household debt in the U.S. stands at $13.7 trillion. Cars and college expenses account for much of the debt, while few people are buying homes.
Ray Boshara, director of the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis, says: “Just because folks on Wall Street say things are fine doesn’t mean most Americans feel like things are fine. When every day is a rainy day for millions of families, things are not fine.”