Most Americans Are Still ‘Woefully Under-Saved’
Five years after the Great Recession, most Americans still haven’t established firm financial footing.
Only 22 percent of Americans have enough emergency savings to cover the recommended six months’ worth of expenses, according to a new report from Bankrate.com.
Of those surveyed, 21 percent had less than three months’ expenses saved.
Related: Americans Low Savings Rate a Bad Sign for Good Economy
“These results are further evidence that Americans remain woefully under-saved for unplanned expenses, and rather than progressing, are moving in the wrong direction,” Bankrate chief financial analyst Greg McBride said in a statement.
The number of Americans without any emergency savings reached a five-year high of 29 percent, up from 26 percent last year. Nearly a quarter of Americans said their savings had deteriorated in the past year.
Six months of emergency savings is the minimum amount recommended by many planners. Those with children or who have poor health or poor job security may need to an even larger emergency fund.
When an emergency hits those without an emergency fund, they often use credit cards or dip into retirement savings, both pricey options that can lead to further financial hardship.
A separate study released last month by BMO Harris Premier Services found that three quarters of consumers had dipped into their rainy day fund, with unexpected car and home repairs the most common reason cited.
Of those who had used emergency funds, about half replenished their savings within six months, while 20 percent never replaced the savings they had used.
It’s Official: No Government Shutdown – for Now
President Trump signed a short-term continuing resolution today to fund the federal government through Friday, December 22.
Bloomberg called the maneuver “a monumental piece of can kicking,” which is no doubt the case, but at least you’ll be able to visit your favorite national park over the weekend.
Here's to small victories!
Greenspan Has a Warning About the GOP Tax Plan
The Republican tax cuts won’t do much for economic growth, former Federal Reserve Chair Alan Greenspan told CNBC Wednesday, but they will damage the country’s fiscal situation while creating the threat of stagflation. "This is a terrible fiscal situation we've got ourselves into," Greenspan said. "The administration is doing tax cuts and a spending decrease, but he's doing them in the wrong order. What we need right now is to focus totally on reducing the debt."
The US Economy Hits a Sweet Spot
“The U.S. economy is running at its full potential for the first time in a decade, a new milestone for an expansion now in its ninth year,” The Wall Street Journal reports. But the milestone was reached, in part, because the Congressional Budget Office has, over the last 10 years, downgraded its estimate of the economy’s potential output. “Some economists think more slack remains in the job market than October’s 4.1% unemployment rate would suggest. Also, economic output is still well below its potential level based on estimates produced a decade ago by the CBO.”
The New York Times Drums Up Opposition to the Tax Bill
The New York Times editorial board took to Twitter Wednesday “to urge the Senate to reject a tax bill that hurts the middle class & the nation's fiscal health.”
Using the hashtag #thetaxbillshurts, the NYT Opinion account posted phone numbers for Sens. Susan Collins, Bob Corker, Jeff Flake, James Lankford, John McCain, Lisa Murkowski and Jerry Moran. It urged readers to call the senators and encourage them to oppose the bill.
In an editorial published Tuesday night, the Times wrote that “Republican senators have a choice. They can follow the will of their donors and vote to take money from the middle class and give it to the wealthiest people in the world. Or they can vote no, to protect the public and the financial health of the government.”
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Can Trump Succeed Where Mnuchin and Cohn Have Flopped?
President Trump met with members of the Senate Finance Committee Monday and is scheduled to attend Senate Republicans’ weekly policy lunch and make a personal push for the tax plan on Tuesday. Will he be a more effective salesman than surrogates in his administration?
Politico’s Annie Karni and Eliana Johnson report that both Democrats and Republicans say Mnuchin and chief economic adviser Gary Cohn have repeatedly botched their tax pitches, “in part due to their own backgrounds” as wealthy Goldman Sachs alums. “House Speaker Paul Ryan earlier this month asked the White House not to send Mnuchin to the Hill to talk with Republican lawmakers about the bill, according to two people familiar with the discussions — though Ryan has praised the Treasury secretary’s ability to improve the legislation itself,” Karni and Johnson write.