A new study finds what many of us have known for quite some time: the American middle class is in guarded condition, just one paycheck or unexpected expense away from disaster.
The survey on which the study is based asked respondents a simple question – if they had an unexpected $2,000 expense in the next month, would they be able to get the funds?
Nearly half said they "definitely" or "probably" would not be able to come up with the money.
While it's not news that chronically low-income consumers are short of financial resources, the researchers said they were surprised to learn that a large subset of middle-class families judged themselves to be financially fragile.
As for how the respondents would go about raising that hypothetical $2,000, the researchers said nearly 20% would resort to "what might be seen as extreme measures," including taking out a payday loan, pawning their possessions or selling their home.
The $2,000 figure was chosen because it is approximately what it might take to replace a transmission, meet a large copayment on a medical expense or unexpected home repair.
The researchers found that, all things considered, 46.5% – nearly half – of all respondents "are living very close to the financial edge."
The study, published by the National Bureau of Economic Research, was based on the 2009 TNS Global Economic Crisis survey.
The U.S. was not the only developed nation with a large number of financially embattled citizens. In both the U.K. and Germany, 50% of households said they would probably or certainly be unable to come up with the emergency funds. The countries with the healthiest middle class were Canada, Netherlands and Italy. In all three countries, fewer than one-third of households said they would have trouble raising the money.