Despite stimulus help, fewer than 4 in 10 Americans could pay for an emergency $1,000 expense

By Aimee Picchi
 |  Special to USA TODAY
Stimulus checks: Nancy Pelosi slams Mitch McConnell for blocking billNancy Pelosi said Mitch McConnell and the Senate Republicans are holding up the distribution of $2,000 stimulus checks to the American people.Associated Press, USA TODAYFewer than four in 10 Americans could handle an unexpected $1,000 expense such as a medical bill or car repair, according to Bankrate.com. That comes after the federal government has seeded the economy with trillions in stimulus funding, ranging from stimulus payments to extra unemployment aid.Without that help, it’s likely that U.S. households would be in worse shape. The share of Americans who could handle an unexpected $1,000 expense is slightly down from the prior year — 39% in the most recent survey compared with 41% a year earlier, the survey of more than 1,000 people in mid-December found. Americans in the spring and summer of 2020 were able to set aside money in their savings accounts and pay down debt thanks to the financial boost from the Coronavirus Aid, Relief, and Economic Security Act (or the CARES Act). But by the end of 2020, personal disposable income had fallen sharply from the boost given by the CARES Act, according to a new analysis of financial data from the Brookings Institution’s Hamilton Project. Parler shutdown: Apple suspends Parler from its App Store while Amazon will shut off web hosting service over violence threatsJob losses: Economy loses 140,000 jobs in December as unemployment holds at 6.7% amid COVID-19 spikesThat means millions of households entered the winter months with less financial flexibility, even as the pandemic rages across the U.S. and employers cut jobs in December. “Despite prospects for a much brighter end to 2021 than the beginning because of vaccinations, we have to get from here to there first,” said Greg McBride, the chief financial analyst at Bankrate.com. “There will be a lot of economic weakness and financial hardship before then.”Already, there are signs of rising hardship among some households. About 90 million adults, or almost 4 in 10, reported it was somewhat or very difficult for their households to pay their usual expenses in the last seven days, according to a new Center on Budget and Policy Priorities analysis of Census data from mid-December. That represents a rise of 13 million adults since late August, the think tank said.“It’s clear households were beginning to run on fumes by the end of the fall,” said Wendy Edelberg, the director of the Hamilton Project. “That’s one of the reasons why economists like me were screaming and yelling for Congress to do more.”To be sure, the Bankrate.com and Census data took the temperature of financial health before the latest stimulus effort was passed, a $900 billion relief bill that is now distributing $600 stimulus payments to eligible adults and children, as well as providing an extra $300 in weekly unemployment aid. But those benefits provide half of the CARES Act’s $1,200 in stimulus checks and $600 in weekly extra jobless aid. The economic crisis isn’t hitting all households equally, with Edelberg noting that people of color, women, families with young children and low-income workers are bearing the brunt of the impact. Millennials were less likely than older generations to say they could handle a $1,000 emergency expense, Bankrate.com found. Fewer than 1 in 3 millennials, who are between 24 to 39 years old, said they could pay for an unexpected bill of that size, compared with almost half of Baby Boomers and Generation Xers, its survey found. Despite the continued hardship that many households are experiencing, it’s important to sock away some emergency savings if possible, Bankrate.com’s McBride said. About 4 in 10 people who couldn’t cover a $1,000 emergency bill would need to borrow the money, with many saying they would turn to credit cards, the study found. But that could saddle those households with high-interest debt, McBride added.Setting up an automatic deposit that puts part of your paycheck into a savings account can help seed an emergency fund, McBride noted. He also recommends putting aside a portion of your stimulus check or 2020 tax refund into a savings account. More stimulus help may be needed to ensure households can regain their footing, especially as the $300 in extra jobless aid expires in mid-March while the vaccines aren’t likely to be widely distributed until the summer, analysts said. “What I’m really worried about is not just the current crisis, which is so acute, but what households’ financial situation looks like when we are on the other side of the pandemic,” Edelberg of the Hamilton Project said.  “For millions of households, finances are going to be a lot weaker.”How gold could save the economy from the pandemicAlthough no country in the world has a gold standard, gold is still needed for the economy, especially now in the middle of the pandemic.Just the FAQs, USA TODAY

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