A new study released by the Pew Charitable Trusts found that 47 percent of American households spend all of their income on expenses.
That same 47 percent also dips into savings or goes into debt to pay bills.
Part of the report was based on numbers from the Federal Reserve, which recently claimed the U.S. economy was expanding “at a solid pace,” noted Reuters.
The Fed also said, “Labor market conditions have improved further, with strong job gains and a lower unemployment rate.”
However, the study by the Pew Charitable Trusts paints a much darker picture.
“[47 percent of U.S. households] could not withstand a serious financial emergency,” said Diana Elliott, Pew research manager and co-author of the study, told the Associated Press.
“Macro indicators tell us a lot, but they don’t tell us what is specifically happening within families,” added Elliott.
The study found that if these households went through a period of no income, they would burn through their savings in 21 days. If these same families used their retirement investments, they would last four months.
A separate report by the Corporation for Enterprise Development stated, “Nationally, 56% of consumers have subprime credit scores, meaning they cannot qualify for credit or financing at prime rates and are more likely to use costly alternative financial products. One in five households regularly relies on fringe financial services, such as payday loans, to meet their needs.”