Federal Reserve’s Latest Economic Well-Being of U.S. Households Report Finds Roughly 1/3 of Americans Could Not Cover $400 Emergency Expense Out of Pocket

In its Economic Well-Being of U.S. Households in 2021 report, issued last week, the Federal Reserve found that self-reported financial well-being reached its highest level since it began surveying households on these topics in 2013. The report also found that while the overall share of adults who could cover a small emergency expense of $400 using cash or its equivalent increased to its highest level at 68 percent, nearly 1/3 of American adults would need to pay by borrowing, selling something, or being unable to pay altogether.

The report is based on the Federal Reserve Board’s ninth annual Survey of Household Economics and Decisionmaking (SHED), which was conducted in October and November of last year.

“The SHED results provide valuable insight into Americans’ financial conditions during the late fall of 2021,” said Federal Reserve Board Governor Michelle W. Bowman in a press release. “This important perspective helps the Federal Reserve better understand the economic challenges that existed during that phase of the pandemic recovery.”

Many of those who would not be able to cover an unplanned $400 expense completely with cash or its equivalent said they would use a variety of approaches to deal with the expense, including putting it on a credit card and paying it off over time (14 percent); borrowing from a friend or family member (8 percent); selling something (6 percent); using money from a bank loan or line of credit (2 percent); and using a payday loan, deposit advance, or overdraft (1 percent). 11 percent of respondents said they would not be able to pay for the expense at all right now by any means.