Uncertainty Dominates U.S. Finance Headlines
Recent surveys show that there is low satisfaction with personal finances in the U.S.
At first glance, it would appear as though workers, investors and business owners throughout the U.S. had plenty to be thankful for heading into the 2017 holiday season. The economy at large continues to grow at a steady pace while the stock market keeps breaking records. Meanwhile, the unemployment rate as well as inflation have remained low, both good news for consumers and household finances.
Simultaneously, there has been a renewed discussion in the news media around the tangible effects of economic progress as evidenced by broad measures, like stock prices or growth in the U.S. gross domestic product. Essentially, more experts and casual Americans alike are starting to question how this macroeconomic success explains the micro–level financial frustration still seen among many households.
In U.S., low satisfaction with personal finances
One of the latest signals of underlying stress among an expanding economy is detailed in the 2017 Global Benefits Attitudes Survey from business services firm Willis Towers Watson. According to the survey — which is conducted every other year and poses financial health questions to more than 30,000 privately employed people globally — included several surprising findings:
- Only 35 percent of U.S. workers surveyed said they were satisfied with their financial situation, down from 48 percent in 2015, the last time the study was conducted.
- In addition, 30 percent of U.S. participants said they were struggling with their finances or worried about their financial future, compared to just 22 percent in 2015 who said the same.
- Of those who said they were struggling financially, 81 percent were currently living paycheck–to–paycheck. Nearly one–third of this group reported that these money problems were negatively impacting their health or their job performance.
The Willis Towers Watson study is only the latest report to fuel growing concerns among some economists and policy influencers that significant financial hardship continues to underlie what would otherwise seem to be a strong economy. One of the strongest data–driven signals of this trend was seen in the latest quarterly report on household debt in the U.S., compiled by the Federal Reserve Bank of New York.
According to that study, the total value of debt held by American consumers peaked once again in the third quarter of 2017. On the heels of a stronger economy, this wasn't entirely surprising, and could even be considered a promising sign of growing consumer confidence. More troubling findings concerned loan delinquency rates: Nearly 5 percent of the $12.96 trillion in outstanding consumer debt was estimated to be at least 90 days past due. The New York Fed found delinquency rates to be growing particularly among credit card debt and auto loans.
Then reporters looked at quality of life, which can be hard to scientifically measure. According to the Times, though, this boils down to a combination of the cost of housing and local amenities. In looking to strike a balance between those two factors, the reporters eliminated seemingly attractive options like New York City and San Francisco, where property costs much more than the national average.
Debt vs. savings
Consumers take on debt for many reasons, but it's hard to differentiate between "good" and "bad" debt. For instance, taking out a loan to finance a home is generally considered a wise financial move, while doing the same to pay for a vacation usually isn't. It's not possible to know how much of the nearly $13 trillion in outstanding debt is being put to good use, or whether a significant portion of it is being used to cover expenses that households can't meet with income from work.
One recurring survey from Bankrate adds another layer to the question of the true financial health of American workers. According to the study's latest findings earlier in 2017, Bankrate estimated that almost 25 percent of U.S. households had no savings to rely on in case of a financial emergency, like losing a job or bills from a car accident. It's thought that three out of five Americans will encounter a money crunch of some kind in any given year. On the bright side, more respondents to the Bankrate survey reported growth in their savings account balances in 2017 compared to recent years.
Taking all of this together, it's clear that assessing the health of an economy as big as the U.S. is hard to do, even with all the data we can access. The key takeaway could still be the same: Americans should continue to prioritize saving and spending wisely.
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