Half of Americans Are Still Too Broke to Make Major Purchases
Although the worst days of the recession have long since passed, many of us still remember it as it lingers in the back of our minds. It wasn’t all that long ago when unemployment rates reached the double digits (peaking at 10% in October 2009), mass layoffs resulted in families without an income source, and average expenditures dropped as if they were going down the hill of a roller coaster.
The 2007 to 2009 time period was a tough time for consumers, but since then, things have certainly calmed down quite a bit. “Over the year, the unemployment rate and the number of unemployed persons were down by 1.2 percentage points and 1.7 million, respectively,” according to the Bureau of Labor Statistics Employment Situation Summary.
Gallup’s economic confidence index — which measures how Americans view the current economy and whether we think it’s getting better or worse — is higher than it has been in nearly a year and a half. Considering such positive reports on the economic front, one would think that individual households would be thriving financially as well. But that doesn’t appear to be the case for a large portion of households.
How would you answer these questions?
Other data from Gallup conveys the harsh reality that many Americans are still facing some of the same financial issues as before. Gallup asked nearly 15,000 random respondents the question: “Would you be able right now to make a major purchase, such as a car, appliance or furniture, or pay for a significant home repair if you needed to?” Only 50% of people said they could make such a purchase.
Although 88% of respondents said they watch their spending very closely, when the research outlet asked if respondents had enough money to buy the things that they need, 70% said they did, leaving 30% of people who said they cannot afford their necessities. Then, when it asked if survey respondents had enough money to do what they wanted to do, only 32% said they had enough money to cover their wants, leaving 68% who said they cannot afford their desired amount of discretionary purchases.
Could you afford to make a major home repair? What about your needs and wants, are those within your financial reach? Did you worry yesterday that you spent too much money?
Factors to consider
Why is it that so many people face these financial challenges? Well, it’s likely a combination of several factors. In addition to problems people face with overspending and money management, we’ve been forced limit our spending. Income growth has been slow, with increases of 0.2% in both September and October. We have debts to pay, bills to maintain, and homes to upkeep, without corresponding increases in income to adsorb some of these blows.
Over the past few years (especially), we’ve seen prices on food and other necessities rise up to barely affordable levels. Even though things have leveled out and some people have been able to get their heads above water for a little while, most of us know that something can easily rise the tide again.