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A recent report by the US Federal Reserve examines the relative financial health of US households. It makes for very sober reading, highlighting the economic pain suffered by a large swathe of the population.

The report centers around one simple question put to households:

Can you come up with $400 in an emergency (say an unexpected medical bill) and pay for it either in cash or with a credit card whose bill you could pay off within a month?

The answer was jaw-dropping:

For people earning between $40,000 and $100,000 (i.e. not the very poorest), 44 percent said they could not come up with $400 in an emergency.

Even more astonishing, 27 percent of those making more than $100,000 also could not.

The report suggests that this is not poverty. So what on earth is going on?

One thing is clear, and it’s a disturbing message that we keep seeing in many of our neighborhoods and echoed in the media — the great middle-class is declining and income inequality continues to broaden. At the low-end of the economic spectrum, the number of households in or close to poverty is expanding — this, in the richest country in the history of the world. At the high-end, the 1 percent, and especially the richest 0.1 percent, hold an ever greater share of the income and wealth.

Image: Percent of respondents who would completely pay an emergency expense that costs $400 using cash or a credit card
that they pay off at the end of the month (by race/ethnicity and household income). Courtesy: Report on the Economic Well-Being
of U.S. Households in 2014, May 2015. Board of Governors of the Federal Reserve System.

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