Americans Feeling Better About Household Finances — Fed Survey
The above is a title from a WSJ article that appeared today. Based on the title, one would think that the average US adult is doing fairly well, and in fact, “a total of 65% of respondents in the Fed’s 2014 Survey of Household Economics and Decision making said they were “living comfortably” or “doing okay,” up from 62% in the 2013 survey, the central bank said Wednesday. In fact, “Some 29% in 2014 said they expected their income to be higher in the next year, up from 21% a year earlier.”
That all sounds rather positive until one pulls back the curtain on the true detail. “For many Americans, household finances remain fragile: 47% said they wouldn’t be able to cover a $400 emergency expense or would have to borrow money or sell something, and 31% said they went without some form of medical care in the last year because they couldn’t afford it.” I find it truly outrageous and disconcerting that forty seven percent of responders couldn’t meet an unexpected $400 medical emergency!! I find it perplexing that 65% can claim that they are doing at least okay if some percent of them couldn’t come up with $400 to meet an unexpected expense.
We continue to read in the financial press how quality jobs are being created and that the unemployment rate is once again nearing “full employment”. But what doesn’t seem to get the same air time is that we have nearly 93 million age-eligible workers on the sidelines. Among those working, there is a significant % that are forced to work multiple part-time jobs just to get by, and many of our full-time workers are in a position of underemployment given their skill set.
As you know, we are not going to see a strong economic recovery without getting an increase in demand for goods and services. However, with this much potential demand on the sidelines, we aren’t going to see our corporations investing in plant, equipment, and inventory, likely reducing further employment gains.
Lastly, it was reported that 31% of non-retirees said they had no retirement savings or pension. If we want to be able to manage our workforce through a normal life cycle, we need to once again find retirement vehicles that actually help employees save so that they can retire. Defined contribution plans are glorified savings vehicles. DB like plans need to be re-introduced so that we can actually retire our employees with the financial means to remain active participants in our economy.
I am outraged, by the results from this survey, and you should be, too. We are creating an environment that continues to favor only a select few, and they certainly don’t have the ability to prop everyone up. There will be grave economic and social consequences as a result of our inability to get everyone participating in this economy!