Poll: Two-thirds of Americans would struggle to cover $1,000 crisis

NEW YORK -- Two-thirds of Americans would have difficulty coming up with the money to cover a $1,000 emergency, according to an exclusive poll released Thursday, a signal that despite years of recovery from the Great Recession, Americans' financial conditions remain precarious as ever.

These financial difficulties span all income levels, according to the poll conducted by The Associated Press-NORC Center for Public Affairs Research.

Seventy-five percent of people in households making less than $50,000 a year would have difficulty coming up with $1,000 to cover an unexpected bill.

But when income rose to between $50,000 and $100,000, the difficulty decreased only modestly to 67 percent.

Even for the country's wealthiest 20 percent -- households making more than $100,000 a year -- 38 percent said they would have at least some difficulty coming up with $1,000.

"The more we learn about the balance sheets of Americans, it becomes quite alarming," said Caroline Ratcliffe, a senior fellow at the Urban Institute focusing on poverty and emergency savings issues.

Harry Spangle is one of those Americans.

A 66-year-old former electrician from New Jersey, Spangle said he thought he always would have a job and "lived for today" but lost his job before the downturn.

He said he would have to borrow from friends or family in order to cover an unexpected $1,000 expense.

"I have a pension, and I am on Social Security, but it's very limiting," he said. "It's depressing."

Having a modest, immediately available emergency fund is widely recognized as critical to financial health.

Families that have even a small amount of non-retirement savings, between $250 and $749, are less likely to be evicted from their homes and less likely to need public benefits, an Urban Institute study found.

"People are extremely vulnerable if they don't have savings," Ratcliffe said. "And it's a cost to taxpayers as well. Lack of savings can lead to homelessness or other problems."

Despite an absence of savings, two-thirds of Americans said they feel positive about their finances, according to survey data released Wednesday by AP-NORC, a sign they're managing day-to-day expenses fine.

The challenge for many often comes from economic forces beyond their control, such as a dip in the stock market that threatens their job or an unexpected medical bill -- risks that have shattered the confidence of most in the broader U.S. economy.

Yet when faced with an unexpected $1,000 bill, a majority of Americans said they wouldn't be especially likely to pay with money on hand, the AP-NORC survey found.

A third said they would have to borrow from a bank, friends or family or put the bill on a credit card.

Thirteen percent would skip paying other bills, and 11 percent said they likely would not pay the bill at all.

The reasons Americans don't save are complex.

One economist said it's a holdover from the '70s and '80s, when high inflation ate into the value of money stashed in a savings account.

Others said U.S. tax policy rewards saving money for retirement or taking out a mortgage to buy a home over short-term emergencies.

The Great Recession and lack of wage growth in recent years have not helped. In the same AP-NORC poll, 46 percent of workers said their wages have remained stagnant in the last five years, and another 16 percent said they've actually seen salary cuts.

Meanwhile, costs for basic needs, such as food, housing and health care, have risen.

Mitchell Timme, 26, said his wages have remained basically flat for the last few years, while his cost of living has increased.

Once everything is paid, "there's nothing left to save," he said.

"It definitely adds stress to everyday life. It hangs over you. While it's not something you would complain about every day, it's there. And it weighs on you," said Timme, who works at a security company in Phoenix.