The mainstream media and the government tell us that economic expansion is the largest it has been since the 1990s, with the stock market at record levels. Yet the benefits of such a booming economy are being unevenly distributed, leaving millions struggling to pay their bills.
According to a new analysis by The Washington Post, 60 percent of Americans have benefited from the growing economy while 40 percent have not.
The 40 percent who are still struggling have seen very little wage growth but rising housing, health care, and education expenses. Because of this they experience rising personal debt and are unable to save money to invest in buying a home, purchase stocks, or save for retirement.
This group of Americans lives so on edge that one unexpected crisis, such as job loss, cancer, car trouble, or disaster damage, can cause them to be unable to pay their bills. Most of these Americans that experience this hardship are never able to fully recover from its effects.
“So many Americans are living paycheck to paycheck,” said Signe-Mary McKernan, vice president of the Center on Labor, Human Services and Population at the Urban Institute. “We are headed toward a political crisis, if not an economic one.”
Economists worry that with so many Americans in these uncertain financial situations, any setback in the economy could spell disaster for millions. The sheer number of Americans struggling means that the next recession could be worse than “anything in recent history except the Great Recession.”
A study released in May showed that an unexpected expense of even $400 can force more than one-third of American adults into a precarious financial situation. One-quarter of adults have no retirement savings and skipped necessary medical care in 2018 because they could afford it.
The ‘booming economy’ has done “little to narrow the persistent economic disparities by race, education, and geography,” said the study.
The average American family has still not fully recovered from the 2008 financial crisis, leaving many with little to no savings. Families of color, Americans born after 1970 and households earning less than $60,000 are least likely to have recovered. Many families relied heavily on borrowing in recent years to get by. Although wage growth has accelerated in recent months, many have a long way to go to catch up fully financially.