May 26, 2021 - Economy & Business

Index: Financial vulnerability decreased for most of 2021, but spiked in May

Data: Morning Consult/Axios Inequality Index; Chart: Axios Visuals
Data: Morning Consult/Axios Inequality Index; Chart: Axios Visuals

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."
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