Americans are wealthier than ever before by some measures, but there’s evidence that we’re all walking close to the edge, thanks to the post-COVID-19 Biden-Era inflation.
While off its record highs, the stock market is still far higher than in the recent past. In late March, the S&P 500 was 20% higher than its late 2021 (preinflation) highs and triple the level of a decade ago.
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Incomes are also high: Inflation-adjusted personal income rebounded in 2023 to its 2019 highs, which were 20% higher than in 2012.
But underneath all of this wealth is precarity. Americans have more credit card debt and are tapping into their emergency savings more than in recent years.
Bankrate, a financial website, asked Americans, “Have you needed to use your emergency savings any time over the past 12 months?” One in 5 said they had no emergency savings. Another 37% said they had tapped into their emergency savings, including 45% of parents with children at home.
Here’s what’s really concerning: Thirty-eight percent of Americans reported they had to dip into their emergency funds just to pay monthly bills, and 32% said they did so to cover groceries or typical expenses.
Meanwhile, 1 in 3 Americans (33%) have more credit card debt than they have emergency savings. While that’s down a few percentage points from the past two years, it’s much worse than the 22% who said the same in 2022, before Bidenflation really struck.
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This may explain why Americans’ economic mood is sour. Gallup’s economic confidence index is still very much in the negative. Only 20% of Americans said the economy is good or excellent, while 45% said it’s poor. Meanwhile, 59% of Americans said the economy is getting worse, up from 52% who said the same thing in December.
Most adults remember very clearly the financial crisis of 2008 — how many of us felt wealthy because of high incomes and skyrocketing home values. With mortgage rates and house values so high for the past few years, many homeowners are skating close to the edge — and the rest of the country is worried that a little bump could knock the economy into a ditch.