The U.S. economy seems to be positioned relatively well compared to many top European and emerging market economies, but the situation is far from comfortable around the world. In this time of global economic uncertainty, the results of Bankrate’s new financial security survey seem appropriately mixed. Several numbers indicate cause for optimism, while others reveal worrisome trends.
Bankrate’s Financial Security Index (FSI), which incorporates Americans’ savings, job security, debt levels and other factors, currently stands at 103, up from 101.5 in January and 101.1 in December. Not only is U.S. unemployment of 4.9% at an eight-year low, the survey revealed that many Americans consider themselves in a better financial situation than they were just a year ago.
While 21% of those surveyed revealed that they are currently worse-off financially than they were 12 months ago, 30% say they are better-off and 48% say they are about the same.
Unfortunately, the survey also revealed that higher earners are witnessing much more financial improvement than lower earners. In terms of household income, 39% of households earning more than $75,000 per year saw an improvement to their financial situation in the past year compared to only 23% of households earning less than $30,000.
One disturbing trend that the survey revealed is the struggles that Americans are having with emergency savings and credit card debt. Only 52% of Americans have more emergency savings than credit card debt compared to 58% a year ago.
“The reading now is the same as in 2011 when the question was first asked, reflecting zero progress over that time,” Bankrate chief financial analyst Greg McBride says. The trend is especially disturbing considering that the U.S. economy has improved significantly during that time.
In terms of age demographics, the survey revealed that Millennials are much more likely to be setting aside emergency savings than any other age group other than senior citizens. This trend may be one of the few silver linings of the Financial Crisis, which taught many Millennials at a young age about the importance of emergency financial preparation.
Finally, when it comes to job security, 25% of those surveyed feel more secure today than they did a year ago compared to only 10% who feel less secure. The biggest upgrade in confidence came from low-income earners. A third (33%) of respondents earning less than $30,000 noted increased feelings of job security in the past year.