WASHINGTON (AP) — Despite signs that the economy is returning to health, two new reports suggest that most Americans are walking a dangerous financial tightrope.
An analysis of Fed survey data by the Pew Charitable Trusts finds 47 percent of U.S. households say they spend all of their income, go into debt or dip into savings to meet their annual expenses.
The Pew analysis found that if a typical middle-class household had to weather a period of joblessness without any income, its available savings would be exhausted within 21 days. And if that same family also cashed in all their retirement investments to get by, they would burn through those assets within four months.
A separate economic scorecard released today says nearly 56 percent of U.S. consumers have subprime or near-prime credit scores, meaning they must pay a premium to borrow if they qualify at all for traditional loans and credit cards. And roughly 20 percent of households depend on "fringe financial services" such as payday lenders, according to the report by the nonprofit Corporation for Enterprise Development.