62 percent of Americans have less than $1,000 in savings
The New Year started off poorly for global markets, in case you didn’t know, and what’s more, the outlook ain’t so good.
As reported by CNN Money, the Dow Jones Industrial Average had its worst four-day start in the history of Wall Street, with trillions in wealth vanishing on fears that China’s “infrastructure first” economy is in dire need of transformation to a consumer-driven model.
A couple of days into January, China’s market nosedived 7 percent overnight, sending shock waves throughout global markets. The following day the Dow dropped nearly 400 points, the S & P slipped nearly 2.5 percent and the Nasdaq 3 percent.
In all, CNN Money reported:
“The wave of selling has knocked the Dow down 911 points, or more than 5% so far this year. That’s the worst four-day percentage loss to start a year on record, according to FactSet stats that go back to 1897. The Nasdaq, down over 6% in 2016, is off to its bleakest start since 2000.”
“Investors have started the new year in panic mode,” commented Ed Yardeni, president of investment advisory Yardeni Research.
“This has all the earmarks of the beginning of a significant stock market correction. Many would argue it’s the beginning of a bear market,” Tim Anderson, managing director of MND Partners, said in a note to clients.
Many are. Count billionaire investor George Soros in that mix. No matter what you think of his politics, there can be little question he is a skilled market player, based on his wealth and track record.
Just a few days ago he told an economic forum in Sri Lanka that the United States and the world are on the brink of another financial crisis, perhaps one as dramatic and widespread – and debilitating – as the Great Recession of 2008.
And China’s economic chaos is primarily to blame. As reported by CNBC:
“[H]e told an audience that China is struggling to find a new growth model and its currency devaluation is transferring problems to the rest of the world, according to media. He added that a return to rising interest rates was proving difficult for the developing world.”
The current fiscal environment reminds him of the “crisis we had in 2008,” The Sunday Times in Sri Lankareported, according to CNBC. “China has a major adjustment problem,” he added, according to Bloomberg, as cited by CNBC. “I would say it amounts to a crisis.”
This couldn’t come at a worse time for Americans who have been victimized by the Obama economy, and they are many.
According to MarketWatch, the average American has less than $1,000 in savings, and is of course ill-equipped financially to weather much of an economic crisis. Worse, 20 percent don’t have a savings account at all.
Without question, tens of millions of Americans are living on the edge when it comes to their finances. AsMarketWatch noted further:
“Approximately 62% of Americans have less than $1,000 in their savings accounts and 21% don’t even have a savings account, according to a new survey of more than 5,000 adults conducted this month by Google Consumer Survey for personal finance website GOBankingRates.com.”
“It’s worrisome that such a large percentage of Americans have so little set aside in a savings account,” Cameron Huddleston, a personal finance analyst for the site, told MarketWatch. “They likely don’t have cash reserves to cover an emergency and will have to rely on credit, friends and family, or even their retirement accounts to cover unexpected expenses.”
Most of us can’t handle the next financial crisis
That supposition is supported by another survey of 1,000 adults that was conducted earlier this year by the personal finance site Bankrate.com. It found that 62 percent of Americans are without contingency savings for things such as emergency room visits or a $500 car repair.
If faced with a financial emergency, many said they would likely raise funding by cutting spending (26 percent), borrowing from friends or family (16 percent), or by putting the charge on a credit card (12 percent).
Of Americans who had saved money prior to 2008, more than half – 57 percent – said they had used some or even all of their savings during the Great Recession.
The New Year didn’t start out well financially for the globe, and it’s obvious that most Americans aren’t ready to face another financial mess.
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