Most Americans say they lack ready cash to cover a surprise $400 expense – Autoblog

Most Americans dont have the financial resources to cover a surprise expense of $400 a car or appliance repair, or a medical bill without taking on debt, according to a new survey.

Just over one-third of respondents said they have cash on hand to cover the expense, and the figure rises to 48% when including those who said theyd use a credit card but pay it off immediately before incurring interest charges, according to a poll conducted by decision intelligence company Morning Consult for Bloomberg News.

The data highlight widespread financial fragility, even in an economy with unemployment near 50-year lows, and the erosion of the savings cushion that some households built up in the pandemic. It also shows how many Americans could be pushed into taking on more debt even as interest rates surge by a relatively commonplace event.

Weve had two really strong years of jobs growth and there has been a lot of coverage of wage compression, with lower-income earners actually experiencing more rapid wage growth, said John Leer, chief economist at The Morning Consult. And despite all of that, there is still a group of predominantly lower-income adults who are extremely vulnerable.

The findings show that millions of families, if they were faced by an unexpected $400 expense, wouldnt be able to pay some of their other bills.

Whats more, the inability to pay isnt confined to the lowest-income households. About 20% of the middle-income bracket those with incomes between $50,000 and $100,000 said they couldnt cover a $400 expense with cash or equivalents. The figure was 8% among who make more than $100,000.

The poll shows that emergency expenses arent that uncommon. Overall, 44% of respondents said they had such an expense in the prior month, with the most frequent cause being vehicle-related costs, followed by medical bills. The median size of an emergency expense was $483, and many respondents reported that theyd been hit with more than one.

The changing structure of the labor market, with more people reliant on gig work, may also be adding to uncertainty around income and making budgeting harder, according to Sofia Baig, an economist at The Morning Consult. Those kinds of work arrangement also leave many families depending on unscheduled and likely higher-cost childcare, which adds to financial strains, she said.

The Morning Consult survey was conducted between April 12-16, among more than 11,000 respondents.

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Most Americans say they lack ready cash to cover a surprise $400 expense - Autoblog