Yes, the economy has “gotten better” since the recent great recession but, unfortunately, it never really ended for the vast majority of Americans. Indeed, American households all over the country are still struggling with stagnant wages, a labor market that’s sluggish and cost of living expenses that keep on going up. Even worse is that there doesn’t appear to be an end in sight.
According to a recent report from the Federal Reserve, a full 25% of Americans are “just getting by” while approximately 13% are “finding it difficult”. When asked how they felt compared to 5 years ago, over 30% of Americans said that they are worse off today than they were then, and only about 30% said that they were better off. That’s according to the 4100 respondents that answered the survey during September and October 2014.
Below are the biggest signs that the majority of Americans are still broke and struggling. While we usually say “enjoy”, on today’s blog it just doesn’t feel right.
The first sign is automobiles and the fact that new automobile loans are longer than they ever been in history. For example, during the first quarter the average auto loan was 66 months, the highest level since Experian Automotive began reporting about automobile loan data back in 2006. In fact, almost a quarter of all new vehicle loans actually were between 73 and 84 months, nearly 30% more than a year ago. $27,612 was the average amount that was financed as well, an all-time high. When you consider the love affair that Americans have with cars, this data is alarming to say the least.
Another sign is the drop in young Americans going to college. The fact that tuition prices are soaring at a rate that outpaces inflation, and the fact that a degree is no longer a guarantee of success and wealth, is keeping many young adults from spending the money on higher education that they used to. This is bad news on the global front as fewer Americans are going into important fields like science, mathematics, technology and medicine, and another sign that most simply aren’t making enough money.
Savings is another area where, unfortunately, it’s easy to see that Americans are struggling badly. Over 25% have absolutely nothing set aside for an emergency and almost 70% have less than the amount of money they would need for six month’s worth of expenses if they were suddenly unable to work. Even worse is that, in the last 12 months, those numbers have dropped even further. Alarmingly, even households with an annual income of $75,000 or more are struggling, with less than half of them having six month’s worth of savings in an emergency account.
Lastly there is real estate and home ownership which, for the better part of the last century, has been one of the truest signs of American wealth. The Census Bureau recently reported that American homeownership has reached its lowest level in almost 20 years and rental housing has reached its lowest level since 1997. With an increase of just over 6%, rent prices in the last year have been sizable as well, even though they aren’t rising as fast as home prices.
All of this of course is sobering news no matter what your financial status happens to be.