A shocking statistic from the United States Department of Labor, “33 percent of US workers run out of money before their paychecks show up,” was recently released. The fact that a third of all American workers are experiencing financial hardships that hinder their ability to pay their bills and manage their finances is very concerning.
Better times to come back into the economy
The consequences of an economic downturn for our economy and the American economy itself are huge. While many would hope for better times to come back into the economy, most Americans are still wondering how far the recession will take their country. This statistic could only mean one thing: the American economy is in deep trouble.
Many will try to hide their struggles and keep their checkbooks for weeks or months at a time hoping that they can spend the money on things they need when their paychecks finally show up. However, a job loss can cause even the most capable worker to run out of money before paydays.
The percentage of American workers having difficulties paying their bills is a sad statistic and one that many economists and forecasters are asking questions about. In a recent interview with CBS News, Lawrence Katz, Professor of Economics at Harvard University, stated, “I’m afraid that the United States is in a liquidity trap, which means that there is not enough money in the banking system to pay all of the credit card debt and there is not enough money to produce enough goods and services to pay off all the debt.
Liquidity trap and the negative impact it is having on the American economy
According to Professor Katz, he has “no doubt” that the United States is in a liquidity trap and the negative impact it is having on the American economy is having a very negative effect on the American economy. The reason that this is so important is because the United States is a nation of households who own homes and cars and a large number of these consumers cannot afford to make monthly payments on their debt.
What is even more alarming is that many of these households in America are families headed by people who have no ability to work because of illness or disability. This is a clear indication that the financial struggles of American workers are not isolated incidents but instead a deep rooted problem in our country’s economy.
When asked why it is that they cannot afford to pay their bills, most American workers simply answer, “I don’t know.” As simple as this answer sounds, it is quite troubling to know that even with the most obvious and professional appearances, this is a very real possibility.
A good chance that many American workers will run out of money
With unemployment still at record highs and joblessness among workers in America not showing any signs of dropping, there is a good chance that many American workers will run out of money before their paychecks do. Most of them don’t even realize the source of their trouble and their struggle to make the mortgage or car payments on time or save enough for their medical needs and education expenses.
One reason the unemployment rate is increasing so rapidly is because of the lack of effort and determination on the part of those who have lost their jobs. With little money to spend on food, gas, clothing and utilities, it is easy to see why so many Americans are struggling.
Even when a consumer has money in their bank account, they may be facing difficulties because their checkbook has been sent to collection. Many consumers are trying to keep up with the payment when they receive a letter stating they are being placed in the collections account for non-payment of your account.
Forced to put in their own money
While many are forced to stop paying their bills and leave their home, they are also forced to put in their own money as the only way they can get by and deal with the emergency that may come up. Many have been forced to leave behind the luxuries that they once enjoyed in order to provide basic necessities for their families.
Consumer issues are affecting millions of people around the country. Perhaps, it is time that politicians and other high ranking government officials take notice and take a serious look at this problem and what the ramifications of such a situation could be.