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Nearly Half of Americans Are ‘Financially Fragile’
Wall Street Journal Blogs ^ | May 25, 2011 | Phil Izzo

Posted on 05/25/2011 11:46:22 AM PDT by rightwingintelligentsia

Nearly half of Americans say that they definitely or probably couldn’t come up with $2,000 in 30 days, according to new research, raising concerns about the financial fragility of many households.

In a paper published by the National Bureau of Economic Research, Annamaria Lusardi of the George Washington School of Business, Daniel J. Schneider of Princeton University and Peter Tufano of Harvard Business School used data from the 2009 TNS Global Economic Crisis survey to document widespread financial weakness in the U.S. and other countries.

The survey asked a simple question, “If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?” In the U.S., 24.9% of respondents reported being certainly able, 25.1% probably able, 22.2% probably unable and 27.9% certainly unable. The $2,000 figure “reflects the order of magnitude of the cost of an unanticipated major car repair, a large copayment on a medical expense, legal expenses, or a home repair,” the authors write. On a more concrete basis, the authors cite $2,000 as the cost of an auto transmission replacement and research that reported low-income families claim to need about $1500 in savings for emergencies.

Financial fragility isn’t limited to low-income groups. “Households with socioeconomic markers of vulnerability (income, wealth, wealth losses, education, women, families with children) are more likely to be financially fragile, and substantially more so,” the authors write. “The more surprising finding is that a material fraction of seemingly ‘middle class’ Americans also judge themselves to be financially fragile, reflecting either a substantially weaker financial position than one would expect, or a very high level of anxiety or pessimism. Both are important in terms of behavior and for public policy.”

(Excerpt) Read more at blogs.wsj.com ...


TOPICS: Business/Economy
KEYWORDS: 2thousanddollars; bhoeconomy; debt; default; depression; depression2point0; economy; finances; financialnews; getreadyhereitcomes; globalism; greatestdepression; greatrecession; preparedness; preppers; prepping; survivalping; thousand; twothousand; twothousanddollars
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1 posted on 05/25/2011 11:46:26 AM PDT by rightwingintelligentsia
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To: rightwingintelligentsia

Scary.


2 posted on 05/25/2011 11:48:35 AM PDT by CommieCutter (Promote Liberal Extinction: Support gay marriage and abortion!)
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To: rightwingintelligentsia

and fertile fishing grounds for Socialist demagoguery


3 posted on 05/25/2011 11:49:48 AM PDT by Buckeye McFrog
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To: rightwingintelligentsia

Anecdotal evidence is that some who appear to be in gangs, or are “baby mamas”, have nice cars and wear “bling”. These sorts of people may not have a lot of cash for unexpected expenses, but seem to spend what they do have to buy whatever they want.


4 posted on 05/25/2011 11:49:48 AM PDT by Dilbert San Diego
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To: rightwingintelligentsia

I’ll bet its a lot more than half. Especially when you throw in the tens of millions of people who are in the country illegally.


5 posted on 05/25/2011 11:52:03 AM PDT by crosshairs (Say what you want about the South, but you never hear of anyone retiring and moving north.)
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To: rightwingintelligentsia

I have the advantage of being broke.


6 posted on 05/25/2011 11:52:12 AM PDT by cripplecreek (Remember the River Raisin! (look it up))
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To: rightwingintelligentsia

When the POTUS is a diverse urban person the only thing more amazing than the volume of stuff that ends up hitting the fan is the number of ways that conjured up to spin it as POSITIVE.

1. people losing their jobs is really Obama coaxing them to the things REALLY important in their lives.

2. When they can’t afford expensive gas, that’s actually an innovative way of incentivizing alternative energy research.

3. When you’ve got scads of PO FOLKS, they’re actualy “financially fragile”.


7 posted on 05/25/2011 11:53:22 AM PDT by gaijin
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To: rightwingintelligentsia

Wow I knew things were bad but that is such a low amount not to be able to come up with in a month?


8 posted on 05/25/2011 11:54:19 AM PDT by chris_bdba
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To: Hoosier Catholic Momma; CottonBall; TenthAmendmentChampion; Chickensoup; JDoutrider; ...

Keep being weird.

Dave Ramsey Fan Ping List.

If you would like to be added to the “Live like no one else, so that you can LIVE like no one else” list, feel free to Freepmail me.


9 posted on 05/25/2011 11:54:41 AM PDT by CSM (Keeper of the "Dave Ramsey Fan" ping list. FReepmail me if you want your beeber stuned.)
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To: Jet Jaguar; NorwegianViking; ExTexasRedhead; HollyB; FromLori; EricTheRed_VocalMinority; ...

The list, ping

Let me know if you would like to be on or off the ping list

http://www.nachumlist.com/


10 posted on 05/25/2011 11:55:41 AM PDT by Nachum (The complete Obama list at www.nachumlist.com)
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To: rightwingintelligentsia

Millions of people have not paid a mortgage payment in months and you want to know if they can come up with 2000 dollars in 30 days. DUH?


11 posted on 05/25/2011 11:56:56 AM PDT by org.whodat
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To: rightwingintelligentsia

Might have it, but don’t want to use it. The emergency would have to be very, very important.


12 posted on 05/25/2011 11:59:28 AM PDT by madison10
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To: rightwingintelligentsia

“If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?”

Yieks!!! That is so frightening. We really need to do something or folks are going to be in the streets during retirement time. Some of these folks are educated and relatively successful folks who would have this problem. Businesses need to go back to the pension program. Yes it might cost more but we are going to pay for these folks one way or another. Pensions were the best thing for America and now they are practically gone. When pensions were around, people used to work at one company for 50 years.....there is no loyalty anymore at all.


13 posted on 05/25/2011 12:00:25 PM PDT by napscoordinator
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To: chris_bdba

“Wow I knew things were bad but that is such a low amount not to be able to come up with in a month?”

The sad thing is that the folks answering that they couldn’t come up with it, didn’t even default with the thinking of getting a second job or selling something.

ANYONE could come up with 2K in 30 days by delivering pizzas or selling some of their extra “stuff” on e-bay.


14 posted on 05/25/2011 12:00:29 PM PDT by CSM (Keeper of the "Dave Ramsey Fan" ping list. FReepmail me if you want your beeber stuned.)
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To: org.whodat

Yeah, no kidding. And according to my financial adviser everyone is supposed to have enough cash reserves on hand to last six months (if unemployed).

I’m financially quite stable and I don’t even have that kind of cash laying around.


15 posted on 05/25/2011 12:00:37 PM PDT by Peter from Rutland (!@)
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To: rightwingintelligentsia

Perhaps I misinterpreted this, but it sounds to me like they are talking about coming up with $2,000 from current/new income. It looks like, if you have to take the $2,000 from savings, you are in the fragile group, which would seem to make this a very stupid study with unsupportable conclusions. ?? Maybe I did not understand.


16 posted on 05/25/2011 12:02:03 PM PDT by NEMDF
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To: rightwingintelligentsia

Fra-gee-lay. They must be Italian.


17 posted on 05/25/2011 12:03:02 PM PDT by dfwgator
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To: rightwingintelligentsia

And the higher the gas and food prices go, the more of us will be added to that list.

Did they have a choice for “sure, I’ll rob Peter to pay Paul”?


18 posted on 05/25/2011 12:03:39 PM PDT by Grumpybutt
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To: rightwingintelligentsia
The study defines financial fragility as certainly unable or probably unable to obtain $2000 within 30 days of facing an emergency.

Later in the article, it says: “The more surprising finding is that a material fraction of seemingly ‘middle class’ Americans also judge themselves to be financially fragile"

If this is an accurate reflection of the study, I'd like to know what percentage constitutes the "material fraction" of the middle class Americans who probably can't raise $2000 in an emergency.

19 posted on 05/25/2011 12:03:53 PM PDT by lonevoice (Where the Welfare State is on the march, the Police State is not far behind)
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To: CSM

ANYONE could come up with 2K in 30 days by delivering pizzas

Really???? That seems a bit unrealistic. You get minimum wage which is practically zero dollars. So basically you are hoping for 2 grand in tips. I don’t think that this is possible.


20 posted on 05/25/2011 12:04:28 PM PDT by napscoordinator
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