A Quarter Of American Adults Can't Pay All Their Monthly Bills; 44% Have Less Than $400 In Cash

Tyler Durden's picture

There was some good news and some not so good news in the Fed's latest annual Report on the Economic Well-Being of U.S. Households.

First the good news.

The report, based on the Board's fourth annual Survey of Household Economics and Decisionmaking conducted in October 2016, presents a "picture of improving financial well-being among Americans", at least according to the report (read on to see if this is merited). Overall, 70% of the more than 6,600 respondents said they were either "living comfortably" or "doing okay," up 1% from 2015 and up 8% from the first survey results in 2013.

Not surprisingly, the highest percentage, or 92%, of those who responded they were "living comfortably" was among the group with more than $100,000 in family income. For Americans making less than $40,000 the breakdown was almost evenly split with 49% saying they are "just getting by."  According to the same study, 28% of respondents said that their income in the last 12 months was less than $25,000, and 40% report that their income was less than the key $40,000 cutoff, which suggests that roughly 4 in 10 Americans are "finding it difficult to get by."

The improvements in well-being as reported by the survey respondents were concentrated among high-income adults, with at least some college education, and prompted the WSJ to write that "U.S Household financial health improved in recent years." Even so, most of the changes reported in the survey were relatively modest, "reflecting a slowly improving economy and an unemployment level at or below 5% throughout 2016."

Now, the not so good news.

Nearly eight years into an economic recovery, nearly half of Americans didn’t have enough cash available to cover a $400 emergency. Specifically, the survey found that, in line with what the Fed had disclosed in previous years, 44% of respondents said they wouldn’t be able to cover an unexpected $400 expense like a car repair or medical bill, or would have to borrow money or sell something to meet it. Troubling as this statistic remains, the overall share of adults who would struggle to come up with $400 in a pinch has declined by 2% from the last survey conducted in 2015, and down 6% since 2013.

Of the group that could not pay in cash, 45% said they would go further in debt and use a credit card to pay off the expense over time. while a quarter would borrow from friends of family, and another 27% just couldn’t pay the expense. Others would turn to selling items or using a payday loan.

The breakdown was largely by education attainment: 79% of those with at least a bachelor’s degree said they would still be able to pay all of their other bills in full if hit with a $400 charge. Just 52% of those with no more than a high school diploma said the same.

Just as concerning were other findings from the study: just under one-fourth of adults, or 23%, are not able to pay all of their current month’s bills in full while 25% reported skipping medical treatments due to cost in the prior year. Additionally, 28% of adults who haven’t retired yet reported to being grossly unprepared, indicating they had no retirement savings or pension whatsoever.

The median out-of-pocket cost for an unexpected, major medical expense was $1,000, and 42% of those with such an expense in the past year either had debt relating to that expense or unpaid balances. The Fed reported that 24 million adults are in debt from medical expenses incurred over the previous year.  As a result, many respondents went without some type of care, dental care in particular, because they could not afford it, though the 25% who reported such a situation was down from 27% in 2015.

Commenting on the report's concerning findings, Fed Governor and Hillary Clinton supporter Lael Brainard said that "the survey findings remind us that many American households are struggling financially, including fully 40 percent of those with a high school diploma or less. More broadly, 44 percent of all respondents could not cover an unexpected $400 emergency expense or would rely on borrowing or selling something to do so. The survey also shows that many adults have no savings for retirement."

The findings also underscore themes apparent during the presidential election, namely the growing gap between the elites and the broader population. Of whites with a bachelor’s degree or more, 85% said they’re doing OK or living comfortably, compared with 62% for whites with a high-school diploma or less. Blacks and Hispanics have similar but narrower gaps in response to that question when sorted by education.

The biggest differentiator appears to be education: the Fed reported that 82% of adults with a bachelor’s degree or more in education said last year they were “living comfortably” or “doing okay,” up from 80% the year before, as well as 69% of those with some college or an associate degree, up from 66%. Furthermore, 79% of those with at least a bachelor’s degree said they would still be able to pay all of their other bills in full if hit with a $400 charge. Just 52% of those with no more than a high school diploma said the same.

Americans’ sense of economic health also varied among racial and ethnic groups. Of the respondents with no more than a high-school diploma, a greater portion of non-Hispanic whites—20.5%-- reported being worse off than a year before than did non-Hispanic blacks, at 18.6%, or Hispanics, at 20.2%.

Asked to comment by the WSJ on the latest annual study, Jonathan Morduch, a New York University professor of public policy and an economist said that “everybody on the low end feels like they’re in a different situation, almost like they’re in a different America than those with a bachelor’s or more.” He added that “The combination of instability and illiquidity are really hurting at the low end,” he added.

That's the same "end" that had such an outsized impact on the latest presidential election.

So based on the latest set of Fed results presented above, the solution to America's wealth problem would be to force every American into a college education. Well, sure... just make sure it's debt free, because as even the NY Fed's Bill Dudley admitted in early April, student debt and default are a “headwind to economic activity" noting that "rising student loan debt in the United States could ultimately hurt
overall home ownership and consumer spending and erode colleges' and
universities' ability to elevate lower-income students."

There are "potential longer-term negative implications of student debt on homeownership and other types of consumer spending," Dudley said.


"Continued increases in college costs and debt burdens could inhibit higher education's ability to serve as an important engine of upward income mobility, (and) these developments are important and deserve increased attention."

Which is understandable with a record $1.44 trilion in student loans outstanding as of March 31, surpassing even the $1.1 trillion in US auto loans.

Here are the disturbing findings from the latest NY Fed study on America's student debt crisis:

...our analysis shows that for any given level of educational attainment, those with student debt are less likely to own a home in their early thirties than those who completed their education without taking on as much—or any—debt.


To the extent that the statistical associations we uncovered reflect a causal impact of debt on homeownership, they have important implications for the housing market and future spending behavior.


Homeownership represents an important means of wealth accumulation, with housing equity being the principal form of wealth for most households. So, changes in the way we finance higher education, with an increased reliance on student debt, may have important implications for the housing market and the distribution of wealth.

It only took the Fed about 6 years to figure out what was patently obvious to everyone else.  Alas, that does not help solve the core underlying problems discussed above because absent a world in which US colleges hand out diplomas to everyone - which will never happen - the vast wealth gap will only get bigger. And that "prediction" does not even take into account the fact that the US is now about 2 years overdue for a major recession.

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serotonindumptruck's picture

Blood from a turnip

Water from a stone

If you think you're getting paid

Suck on my bone

MisterMousePotato's picture

Actually, there is a lot in this report/article to cheer oneself.

For instance, over half of Americans making less than $25,000 per year report that they're doing just fine, thank you very much. This is consistent with my repeated arguments in these pages that it is, indeed, possible for a family of three to thrive on the income from a part-time job at McDonald's or thereabouts. I know this is so, because I have been doing so; in fact, I live very, very well on very modest means. It didn't/doesn't happen by accident. (An 'artist of life' in Thoreau's words.)

To me, this means that a lot of Americans are a lot smarter than a lot of us here at the Hedge give them credit for.

Another thing I noticed is that half of Americans, confronted with an unexpected expense, are in a position to and would employ the judicious use of credit, which I think is consistent with best practices espoused here; namely, credit cards not pegged at the limit (someone forewent the latest iThing?), and using credit to fix the idler pully on their car so as to get to the doctor, work, grocery store, etc.

Seems like a smart thing to me, although I would concede that it would indicate a more prosperous and secure community if the bar were somewhat higher - a couple/few thousand dollars, maybe?, or the six month savings advocated by such as Dave Ramsey?

Creepy_Azz_Crackaah's picture

I was there for many, many, years. I've worked two jobs most of my life. I'm fnally about to hire a carpenter to do some work, not doing it all myself. Not once did I insist that the government point guns at people, taking their income to give to me. 

Sorry.  Government and the Fed are the problem, not the solution.

FREE $HIT FOR EVERYBODY(!!!) just makes things worse.  More gubmint just makes things worse.

Nice Try Lao Che's picture

Take (((Janet Yellen))) advice & TWERK HARDER... That's all it takes to be successful... Well, that, a whiny voice, & a barber with the proper sized bowl for a template..

JamesBond's picture

and yet do not this same 44% continuosly vote for their socialist masters who fund the free shit army?




Croesus's picture

You can't fix stupid, so yes, they do.

J S Bach's picture

Hey... when everything on two legs can borrow to their heart's content, why SHOULD anyone have a care to save?  That's for suckers.  After all, those who have "saved" have seen nothing but an erosion of their counterfeit dollars (with .01% interest rates in savings accounts).

But, for those old-fashioned sticklers amongst us who have the vision to see beyond today's mindless entertainments and pleasures... that winter season is fast approaching. "Tra-la-la" sang the grasshopper all summer long while the ants busily worked and stored their provisions for the coming paucity.

armada's picture

"in the Fed's latest annual report"

Anyone actually believes anything the Fed says?

Oh regional Indian's picture

One thing has to be said, the system tends to keep fantastic records of it's implosions and explosions....

There is on word, the death of the world as we knew it and that is DEBT. No surprise that EBT make sup most of DEBT.

In case you forgot... more stats, via good ole ZH itself...


limpinalien69's picture

Report by the (((Fed))). Nuff said.

Schlump's picture

"The beauty of me is that I’m very rich." (actual Trump quote)

So I don't have to care about the lumpenproles, like you ZeroHedgers, who have no money.

Here, I'll give you a gem from Art of the Deal:

"The point is, you can never be too greedy." (actual Trump quote)

Hope that helps. So many losers in this country. Sad.

Fundies's picture

You're a funny fucker Schlump.

Sudden Debt's picture

This one I do. I think it's even higher then that.


And just imagine: If people are suffering now when we're at the height of the economy, what will they do when inflation hits and prices double?

What will they do when there's a shortage due to an economic implosion and prices for everything skyrocket?

These people will be the first to starve.


cheka's picture

many of them are receiving welfare from multiple sources.  add up the present value of those annuities and you quickly arrive at six to seven figures net worth.  these hype articles ALWAYS ignore the value of the annuities

StychoKiller's picture


                                                   ORIGINAL VERSION:
The ant works hard in the withering heat all summer long, building his house and laying in supplies for the winter. The grasshopper thinks he's a fool and laughs and dances and plays the summer away.  Come winter, the ant is warm and well fed.  The grasshopper has no food or shelter, so he dies out in the cold.

                                                    MODERN VERSION:

The ant works hard in the withering heat all summer long, building his house and laying in supplies for the winter.  The grasshopper thinks he's a fool and laughs and dances and plays the summer away.

Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well-fed while others are cold and starving.

CBS, NBC and ABC show up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food. America is stunned by the sharp contrast.  How can this be, that in a country of such wealth, this poor grasshopper is allowed to suffer so?

Kermit the Frog appears on Oprah with the grasshopper, and everybody cries when they sing, "It's Not Easy Being Green."

Jesse Jackson stages a demonstration in front of the ant's house, where the news stations film the group singing, "We shall overcome."  Jesse then has the group kneel down to pray to God for the grasshopper's sake.

Tom Daschle exclaims in an interview with Peter Jennings that the ant has gotten rich off the back of the grasshopper, and calls for an immediate tax hike on the ant to make him pay his "fair share."

Finally, the EEOC drafts the "Economic Equity and Anti-Grasshopper Act", retroactive to the beginning of the summer.  The ant is fined for failing to hire a proportionate number of green bugs and, having nothing left to pay his retroactive taxes, his home is confiscated by the government.

Hillary gets her old law firm to represent the grasshopper in a defamation suit against the ant, and the case is tried before a panel of Federal judges that Bill had appointed from a list of single-parent welfare recipients.  The ant loses the case.

The story ends as we see the grasshopper finishing up the last bits of the ant's food while the government house he is in, which just happens to be the ant's old house, crumbles around him because he doesn't maintain it.  The ant has disappeared in the snow.

The grasshopper is found dead in a drug-related incident and the house, now abandoned, is taken over by a gang of spiders who terrorize the once peaceful neighborhood.

paulbain's picture




Excellent, StychoKiller, please keep up the good work.




spiral galaxy's picture

Great! So when do us grasshoppers go after Jeff Bezos the ant along with his little ant friends Zucketberg, Gates, Buffet and Ellison? The collective wealth of this ant hill is some $350 billion -- for only 5 ants.

peopledontwanttruth's picture

You have a way with words

I wish I could have hit the up vote like I was firing missles on an arcade game.

shovelhead's picture

So if you don't show up that means they won't either?

CheapBastard's picture

"Their entitled to it!"


~barrack bin Bama

Free food, free housing, free EBT, free cell phones, free health care and so on.

runswithscissors's picture

If you have money in the bank, money in your wallet, and loose change lying around your house, you are richer than 92% of the world....so $400 ain't too shabby maybe even a 2-percenter


JamesBond's picture

Perspective is supposed to help maintain mental health but I don't think snowflakes have any to maintain...



BeanusCountus's picture

These numbers are no different than they have been for 100 years. Nature of capitalism. Only problem is the debt that has been run up to to pay for the bottom group. Sustainable? My guess is no. But I've been saying that for 30 years.

JamesBond's picture

It's hard to convince an addict that drugs are bad for them, a drunk that booze is bad for them, and the free shit army that socialism is bad for them.

Anteater's picture

And yet do not this same 44% continuosly vote for their socialist masters who fund the Army?

56% of Americans work for Mil.Gov.Edu, or are on contract to it, or receive subsidies from it.

We have achieved a Corporate:State critical mass. Then, at some point, a searing white light, followed by 3.1 million years of stillness.

peopledontwanttruth's picture

You can't learn or teach what you learned in those years with books. Good for you

peopledontwanttruth's picture

He who is richest is not he who has the most, but he who needs the least!

Slavery isn't always about how much you owe.

J S Bach's picture

Very well put, PDWT. 

My definition is... "He who is richest is he who can take the most beyond the grave." (That is... all things that exist in your soul - family, art, good deeds, humility, virtues, etc...)

peopledontwanttruth's picture

I'm going to save that one. Very good points

Xena fobe's picture

So the answer is reduce your standard of living?  How low is low enough?

peopledontwanttruth's picture

Well to me it isn't about lowering my standard of living. To me it's about being content with simpler things in life that brings joy and happiness. A peace that money can't and never will buy. It's always the simple things that bring joy.

In this race whoever has the most isn't the winner. They're the loser. Life before these last few decades were filled with a much simpler way of life, we were better for it.

They call all these things that strap us to servitude progress, at this rate how much more progress can we take. Families to communities to countries are completely falling apart.

Change your thinking and get off the commercial hampster wheel No one who has ever died said they wish they'd worked more. Nothing we truly possess brings true happiness. It's family and true loyal friends that brings happiness. Re-evaluate your goals but leave money out of it.

I'm older now and the less I have the happier I am.

shovelhead's picture


Spoken like a true broke ass.

The ancient Greeks were always whining about the good old days too.

If all you can eat is rice then it pays to be happy eating rice. But don't expect me to believe it.

a Smudge by any other name's picture

As I have lived below poverty line for a portion of my life, I now am called to take care of an indigent elderly widow.

I don't know how I'm going to afford this. I just know I will.

I hope you hard hearts fuck yourselves now. You just fucked yourselved in a way you don't even know.

To you kind hearts, you need no explanation why. And I will appreciate your blessings in this matter.

peopledontwanttruth's picture

Well I'm not fit to judge hearts neither mine or anyone else's but I pray that you are blessed and as Christ half brother said, "taking care of widows and fartherless children is the worship that is pure"! So without being your judge I know from the One who cannot lie, you have His blessing and you will make it. You apparently have a kindness about you that that is becoming more rare.

peopledontwanttruth's picture


While not wishing to engage in a verbal argument with you as I really don't know you, and you to towards me either, I felt the need to at least thank you for a reply. I'm not broke and actually quite to the contrary but I'm neither wealthy, I'm content. I'm an older man now about 70-75% through my journey of life unless something unexpectedly comes my way. However with that said when I was younger I remember working 16-20 hours a day and as a matter of fact while "chasing the wind" twice in my life worked 48 hours straight doing 2 jobs. It got me nowhere. During my life I personally owned 14 homes, ran 4 businesses, traveled all over the world and it got me nowhere but exhausted and frustrated as none of those pursuits brought happiness. As a matter of fact I lost most of what I made in divorce. Yes I was stupid, arrogant and foolish.

I've attached here a site from wealthy people. Interesting when you see their quotes they're not happy but actually miserable people. All their thoughts are money, work and nothing of peace and happiness. Thus why Hollywood has such high divorce rates.


J Paul Getty's quotes he died just as the poor man does but read his comments he wasn't a happy person. Wealthy but not happy.


Most of these people are miserable and fell into the trap thinking money brought happiness. When I say to me money doesn't mean anything I mean it. The incredible thing about it as every ZH poster has said we don't even make money. We make paper IOUs, Federal Notes. We don't really make true money. What an illusion of unbelievable proportions.

I know I need a level of money to survive but it's not my focus as when I was young and foolish. WHEN the collapse comes, just like in the year 1929, it won't be poor or content people throwing themselves off buildings. I set my sights on a higher pursuit. If wealth or perceived wealth is your goal I wish you the best but as for me I don't think that IF I had money I'd be any different than all the other paranoid men/women in history that realized they wasted their lives in a pursuit that brought them misery. Especially when we take our last breath and realize we now need to have an accounting with the Supreme Accountant.

"Where ever your treasure is, there your heart will be also", a very famous man said!

True money, aka gold and silver is taken from within the earth. That's not where my heart is nor do I wish it to be.


BandGap's picture

Well said. I wish I had realized a long time ago that all my efforts weren't to better myself, they were done to fulfill what others told me was "happy". Big homes, nice vacations and all sorts of electronics. I came from nothing, worked my ass off and chased the brass ring. I have made millions for others.

I jumped off that train about ten years ago. I wish it had been from the beginning. I have the best wife in the world, the best family in the world.

peopledontwanttruth's picture

Thanks Band,

  That is about when I jumped off too, I too am thankful for my present wife, I heard an old saying that said

"A wise man learns from his mistakes, a wiser person learns from the mistake of others"

For most of my life I have not been wise yet alone wiser, only now in my later years have I wised up some.   I could of been a millionaire if I only would have been wiser or at least wise.  I have read your reply and you and I sound a lot alike in our dead end pursuit of percieved happiness.   However I am glad that I have what I have and no longer chase happiness on what I don't.

We waste some much of our very limited lives worrying about what we don't have and not appreciating what we do have.

Best regards

_triplesix_'s picture

Exceptionally well said.  

As I near 50 myself (and because I am financially starting over after a recently ended 15-year marriage to a spending addict), I honestly find myself completely content with very little--a good book, an occasional glass of wine, and some good conversation with my grown sons.  I honestly don't need any "stuff" any longer--but I also don't feel the least bit deprived.

peopledontwanttruth's picture

Thanks Triple,

  I have read your reply and also Band and I feel like we have so much in common, my ex-wife could no longer hold money in her hand than water, she was in retail therapy constantly.  I am where you are at as well, it is the simple things in life that make me happy.  Some times I feel like that old man in Rooster Cogburn, when he said.  I've seen it all, had it all, been around the world and now is content with living on a river all by himself.   Not that I wish to live alone thus why I am married but I can relate as I lost so much in divorce and now look back on it and ask why did I waste all that precious time.   The one commodity that we have so little of and especially when we are young and can do things that we cannot when older.   Howeve I am glad that I figured it out instead of when I am lying in a pine box and truly wasted the greatest gift we have.  Life and time.  I wish you the best in your later years. lol.  I am right there with you brother.

Best regards

ChargingHandle's picture

This poll us from the United States, not the Comgo  or Budapest. The  laverage person residing in the msot developed nation on earth should have more than $400 in the bank account.

Zorba's idea's picture

Good Luck Thoreau...don't get lost in the woods

JRobby's picture

"We'll  be fighting in the streets

With our children at our feet"