By William McGuinness

WASHINGTON (CBSDC) — A new report suggests a large percentage of America’s middle class not only balances dangerously on the precipice of poverty but also is increasingly falling off.

Some 43 percent of U.S. households have almost no savings and 27 percent are “asset poor” — a new term meaning the household lacks both savings and other assets to cover basic expenses for three months if a layoff or other crisis leads to loss of income, according to the Corporation for Enterprise Development (CFED).

In a year when activists pushed “99 percent” as a moniker for the Main Street American, CFED’s “43 percent” shows the consequence of five years of national economic hardship and a clear window into how many Americans fear for their immediate financial futures.

“Growing numbers of families have almost no savings or other assets to see them through if they lose their jobs or face a medical crisis,” said Andrea Levere, president of CFED. “Without savings, few will be able to build a more economically secure future, including buying a home, saving for their children’s college educations or building a retirement nest egg.”

This new data has significant implications in an election year as President Obama broaches issues of income inequality in his re-election campaign while simultaneously defending his economic record in years that saw 56 percent of Americans’ credit scores fall to subprime levels.

Politics aside, however, the new data offers little hope for families and individuals aiming for long-term financial prosperity.

The study, called the Assets and Opportunity scorecard — uses 52 measures in five different issue areas.

Ida Radamacher, CFED’s VP for Policy and Research, said an individual’s financial assets and income, business and jobs climate, housing and home ownership status and health care and education access all play major roles in how secure the individual is, so the news is negative for many but in different ways.

“The flavor of this formation is different for anyone in America,” she said. “Census Bureau data highlights just one aspect of household finances, namely the percentage of people with insufficient income to cover their day-to-day expenses. The asset poverty and liquid asset poverty data tell a story of families who increasingly have nothing to fall back on and little prospect of building a more prosperous future.”

Sarah Gilbert, the personal finance writer behind, guides her readers with specific posts and instructions on how to grow their savings accounts but acknowledges the task is complicated and littered with distractions.

“Even if people think they know the answer to their financial problems, everyone around us is spending money,” she said. “We’re saving up our wants. It’s easy to let them take over your financial responsibilities.”

She said even those who know they need to put more away say, “I’ll do it next month.”

What’s concerning, Radamacher said, is that possibility diminishes significantly in states that don’t connect its residents to mechanisms that build wealth.

More startling, Michael Norton, associate professor at the Harvard Business School, said that Americans have no idea how poor they actually are.

His research at the Harvard Business School shows the bottom 40 percent of Americans have no net wealth — none.

“When you think about your wealth, you list what you have: a condo, a guitar and whatever. Only much later do they think about what they owe,” he said.

Echoing Radamacher, he said endemic structural issues within both the American financial and tax systems brought citizens to a place where — even if the hangover of recession is cured — working poor have shrinking chances to move upward and have no idea how high one person can go.


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