What President Trump Leaves Out of His Bright Outlook for the Economy
In his recent State of the Union address, President Trump boasted of a glowing outlook for the U.S. economy. Among his flashiest data points were 5.3 million new jobs; record acceleration of wage increases; doubled economic growth; and a massive tax cut for working families.
Sadly, much of his report was misleading or outright false—and the President’s address told only one piece of a far larger, and grimmer, story.
Expand your view of America’s economic health by exploring the 2019 Prosperity Now Scorecard which includes an expanded focus on racial economic disparities:
40 Percent of Americans Don’t Have Enough Savings to Address a Financial Emergency
Forty percent of U.S. households are liquid asset poor, meaning they don’t have enough savings to live for three months on a poverty-level salary following the loss of income. That’s about 130 million people who would see their savings rapidly deplete if they were unexpectedly laid off, or if they incurred a large emergency expense.
We saw a preview of that recently during the longest federal government shutdown in U.S. history, when many furloughed workers had to turn to food banks and part-time jobs to survive. Imagine the scale of hardship during another recession, of which there are warning signs. Also, consider that 20 percent of U.S. households experience income volatility, making it harder for them to build savings. Almost 40 percent of households haven’t saved for emergencies, and 16.5 percent of them have zero net worth.
When people don’t have enough savings for even short-term expenses, it goes without saying that their ability to invest in better economic prospects over the long term is limited at best – and impossible at worst.
People Are Struggling to Pay Bills, Harming Their Credit Profiles
Fifteen percent of U.S. borrowers are severely delinquent, meaning they have at least one account that is 90 days or more past due. Thirteen percent fell behind on bills in the past year. Late bill payments damage a borrower’s credit score, which makes it harder for them to take out a loan for a home, a business, an education or other key asset to economic mobility. Nearly half of U.S. consumers do not have prime credit, leading them to pay higher interest rates on loans and resort to predatory finance.
More Than One-Fifth of Jobs Are Low Wage
22.5 percent of jobs in the U.S. are in low-wage occupations, meaning that they offer a median annual salary below $24,300 (below the poverty level for a family of four). This is not a living wage that families can use to grow their savings to cover both short- and long-term expenses. These jobs also tend to lack important benefits such as health insurance, paid sick leave and paid vacation. While ongoing job growth since the last recession has continued under the Trump administration, too many of these jobs still don’t allow for economic mobility.
Economic Prospects Remain Highly Unequal
Good economic fortune at the national level is not shared equally, as the richest 20 percent of U.S. households earn 4.9 times as much as the poorest 20 percent.
Financial well-being differs vastly according to race. Compared to White households, households of color are 25 percent more likely to be liquid asset poor; 10 percent more likely to have zero net worth; and 10 percent more likely to be in poverty.
Additionally, households that have members with disabilities are experiencing financial vulnerability at a higher rate than other households. 62.5 percent of disabled households are liquid asset poor, compared to 37.6 percent of households without them.
While these numbers speak volumes, they offer just a glimpse of what the Scorecard reveals about economic fragility in America, and how it changes depending on who you are and where you live. Go deeper by exploring the Scorecard in full. You can also check out our Scorecard resources, where you’ll find our analyses of the data, our launch webinar and more!
The 2019 Prosperity Now Scorecard was made possible through the support of the Robert Wood Johnson Foundation and the Ford Foundation.