The US economic expansion this week became the longest in American history, but the growth has been weaker and its benefits distributed far more unevenly than in previous growth cycles, leaving many Americans in a vulnerable position. RNA - The Washington Post conducted interviews with 30 Americans unable to pay all of their bills. A clear pattern emerged from the discussions; most were able to get by with difficulty until they faced an unexpected crisis such as a job loss, cancer, car trouble or storm damage.
“I keep hearing this is one of the best economies we’ve ever had and unemployment is down, especially among African Americans, which I am,” said Sommer Johnson, a 39-year-old African Americans woman who lives in Douglasville, Georgia.
“I’m looking around going, ‘Where is this boom?’ From where I sit, this doesn’t look like the best economy ever,” Johnson added.
The prevailing view among Wall Street investors and Washington policymakers is that there is little to worry about the economy and President Donald Trump has made the economy’s strong performance a centerpiece of his reelection campaign.
But experts say nearly half of Americans have seen insignificant or volatile wage growth, rising expenses for housing, health care and education, and increased levels of personal debt, the opposite of what is expected in good economic times.
Economists fear such precarious financial situations put many Americans at risk if there is even a mild setback in the economy, potentially setting up the next recession to be worse than anything in recent history except the Great Recession.
“So many Americans are living paycheck to paycheck,” said Signe-Mary McKernan, vice president of the Center on Labor, Human Services and Population at the Urban Institute, adding, “We are headed toward a political crisis, if not an economic one.”
Four in 10 Americans say they still struggle to pay their bills, despite the strong economy, according to a quarterly survey by UBS that has shown no improvement since 2014. And looking at how households are doing by class, race or age reveals a concerning picture.
This is a “two-tier recovery”, said Matthew Mish, head of credit strategy at the investment bank UBS. About 60 percent of Americans have benefited financially, he added, while 40 percent have not.
The average American family has yet to recover fully from the 2008 financial crisis, the Federal Reserve found, leaving half the nation with a diminished cushion to handle surprise expenses.
The bottom half has less wealth today, after adjusting for inflation, than it did in 1989, according to Fed data through March of this year.
Data from the Fed and the credit-score company Equifax show that minorities, households earning less than $60,000 and Americans born after 1970 are the least likely to have recovered the wealth they lost in the 2008 financial crisis.
While wage growth has accelerated in recent months, especially for the lowest-paid workers, families who have struggled for years have a ways to go to return to solid footing. Half of US jobs pay less than $18.58 an hour and more than a third pay less than $15, which makes it difficult to save or invest for a better future.
“Just because folks on Wall Street think things are fine doesn’t mean most Americans feel like things are fine,” stated Ray Boshara, director of the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis, noting, “When every day is a rainy day for millions of families, things are not fine.”
To get by, Americans have borrowed heavily in recent years. Total US household debt is now $13.7 trillion, surpassing the 2008 peak in dollar terms, according to the Federal Reserve Bank of New York. The surge in debt this time around is for cars and college, not mortgages.
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