An analysis of federal data by Caroline Ratcliffe of the Urban Institute said the share of Americans who lack enough ready cash on hand for emergencies shot up in the aftermath of the Great Recession.
Ratcliffe said families who did not have enough liquid assets to subsist at federal poverty levels for three months were financially fragile. That amounts to $2,873 for a single person, $4,883 for a family of three, and $5,888 for a family of four.
By this measure, in 2010, 37 percent of families in the middle income group earning $35,600-$57,900 a year were financially fragile -- up from 28 percent in 2007, a year before the Great Recession began.
No income group was spared by the downturn: in most cases, the share of families at risk increased between 9 percentage points to 13 percentage points, the Center for Retirement Research at Boston College said.
Ratcliffe said that financial problems can cascade if cash-poor families resort to high-cost loans or credit cards to pay their bills, and building wealth by saving and investing for college or retirement becomes extremely difficult.
Those without access to liquid assets -- cash or funds in their checking or savings account -- to cover emergencies like health crises, or even car repairs, means financial problems can cascade if cash-poor families resort to high-cost loans or credit cards to pay unexpected bills, Ratcliffe said.
"A shortage of liquid assets can lead to cycles of debt when financial emergencies arise," creating "further financial instability," Ratcliffe said.
The findings were presented to the Congressional Savings and Ownership Caucus.