More New Jersey Families Feeling Financial Stress, Despite Improving Economy [AUDIO]
The economy continues to slowly get better - but a new study finds a growing number of families in Jersey and across the country are tapped-out - in worse financial shape than they've been in several years.
A new University of Michigan report finds 20 percent of families owe more on credit cards, student loans, medical bills and other debt than they have in savings - and the percentage of families that have no savings whatsoever is up to 23-point-4 percent - an increase of almost 5 percentage points from 2009.
Rutgers economist James Hughes said, "Despite that 3 year recovery, many, many households are still in deep financial trouble. The good news is over the past 2 years, the labor market has started to recover- we've added back 4-point-2 million jobs, however the bad news is we're still 4-point-6 jobs short of where we were before the recession began. We still have a lot of unemployed people - they have not been able to get their jobs back - and their finances have deteriorated."
Hughes pointed out, "We've spent 2 decades over-consuming - the savings rate plummeted from about 8 to 10 percent down to 2 or 3 percent. Housing did not turn out to be the super piggy-bank - so now we're paying the price for not being thrifty - not saving-over-consuming. In many cases the value of people's pension plans, the value of their 401 K's, the basic investments in the stock market lost value. They had to tap into their savings in order just to survive on a day-to-day basis, and that really reduced the value of assets and savings that individuals and households have."
He added, "Many participants in the labor market have not been able to match their pre-recession salaries, so even though they are technically employed, they may only be employed part-time or the job they have doesn't pay nearly as well as their pre-recession jobs. We are coming out of the bottom of the worst recession since the Great Depression - so there's still a long way to go. Many households are in the midst of a perfect economic storm."