Opinion editor's note: Star Tribune Opinion publishes a mix of national and local commentaries online and in print each day. To contribute, click here.
•••
It is almost impossible to keep track of all the misleading economic statistics that get bandied about for political purposes. My personal favorite — by which I mean the most disingenuous — is that most Americans don't have enough cash to pay for a $400 emergency expense.
Vice President Kamala Harris used a version of this statistic just last week, saying that "the average American is a $400 unexpected expense away from bankruptcy."
The data say nothing of the sort. The figure is derived from the U.S. Federal Reserve's Survey on Household Well-Being, which asks households if they would cover a $400 emergency expense using cash or in some other way. In 2022, 63% of households said cash, down from 68% in 2021. The results reflect a drawdown of pandemic savings, fewer government benefits and high inflation.
Still, households are better off than they were in years past. In 2013, only 50% said they would use cash, though it is worth noting the $400 question has not been adjusted for inflation and emergencies have become more expensive.
But none of this means that 37% of U.S. households cannot handle a $400 emergency expense — or that it would cause them to file for bankruptcy. The survey asks the cash-poor 37% what they would do if they needed the money. Only 13% of all households said they could not come up with $400 at all.
That's not great, but it is far from the average American falling into bankruptcy over a car repair. The bottom line is that, if faced with a $400 expense, 87% of all U.S. households could still pay their other bills.