Index: Financial vulnerability decreased for most of 2021, but spiked in May
People with lower incomes are feeling financial vulnerability significantly more than their higher-paid counterparts, according to the Morning Consult/Axios Inequality Index.
What's happening: Financial vulnerability relates to the share of Americans who cannot cover basic expenses for a single month with their savings. This is also represented as standard deviations.
What we're hearing: "When it comes to financial vulnerability, the high level of inequality is a feature of the data," Morning Consult chief economist John Leer says.
- "It is inherently a much bigger issue for lower-income people than higher-income people, since higher-income people do not generally struggle to pay their bills. So, the differences among income groups has remained larger over time."
Yes, but: The index measures whether individuals can pay their bills rather than if they have a set amount of money set aside. That makes it a more accurate proxy for inequality, as higher-income earners tend to also have higher bills.
Watch this space: Rising financial vulnerability and increasing inequality put the economy and policymakers in a "precarious position," Leer says.
- "What this data show is there are groups of people that are not experiencing the rebound in economic activity the same way."