The misleading idea that so many US households are so financially precarious feeds the perception that the economy is much riskier than it actually is.
It is almost impossible to keep track of all the misleading economic statistics that get bandied about for political purposes. My personal favorite, by which I mean the most disingenuous, is that most Americans don’t have enough cash to pay for a $400 emergency expense. Vice President Kamala Harris used a version of this statistic just last week, saying that “the average American is a $400 unexpected expense away from bankruptcy.”
The data say nothing of the sort. The figure is derived from the US Federal Reserve’s Survey on Household Well-Being , which asks households if they would cover a $400 emergency expense using cash or the available equivalent. In 2022, 63% of households said yes, down from 68% in 2021. The results reflect a draw-down of pandemic savings, fewer government benefits and high inflation.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
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