Half of Americans Live Paycheck to Paycheck

More than five years after the financial crisis and the beginnings of a recession whose persistence haunts this economy, half of all Americans live paycheck-to-paycheck, meaning that they have little or no savings and virtually no personal financial safety net. 

Calls for ever more austerity raise questions about the ultimate purpose of public policy if alleviating the suffering of those citizens in need or improving the lives of all is not a priority.

The issue, as the following article explains, is not just one of morality or ideology but of strategy: with as much as 70 percent of the economy driven by consumer spending, a chronic reduction in that ability to buy becomes a global competitive disadvantage over time.

The only question is not whether this may have some impact on future economic growth, but when the reduction in that growth trajectory becomes both obvious - and too imposing to correct. JL

Christopher Matthews reports in Time:

Financial insecurity isn’t just affected the lower classes. One-quarter of middle-class households also fall into the category of “liquid asset poor.”

The economic picture is looking brighter these days. The federal government announced that economic growth had picked up to its fastest pace in two years, while employment growth over the past five months has averaged a healthy 185,000 new jobs. But as evidenced by a report from the Corporation for Enterprise Development, nearly half of Americans are living in a state of “persistent economic insecurity,” that makes it “difficult to look beyond immediate needs and plan for a more secure future.”
In other words, too many of us are living paycheck to paycheck. The CFED calls these folks “liquid asset poor,” and its report finds that 44% of Americans are living with less than $5,887 in savings for a family of four. The plight of these folks is compounded by the fact that the recession ravaged many Americans’ credit scores to the point that now 56% percent of us have subprime credit. That means that if emergencies arise, many Americans are forced to resort to high-interest debt from credit cards or payday loans.
And this financial insecurity isn’t just affected the lower classes. According to the CFED, one-quarter of middle-class households also fall into the category of “liquid asset poor.” Geographically, most of the economically insecure are clustered in the South and West, with Georgia, Mississippi, Alabama, Nevada, and Arkansas being the states with the highest percentage of financially insecure.