In a current opinion article on the Bloomberg website, the author, Michael R. Strain examines the hypothetical issue of a sudden $400 expense being something that many Americans could not pay for.
For approximately one year now, various media sources and politicians have been saying that a significant percentage of the population could not afford such an expense.
To Mr. Strain, the claim that almost 40 percent of American citizens could be financially wiped out by an unexpected $400 bill, did not seem realistic.
Mr. Strain traces the ongoing $400 story to an annual report concerning the finances of American households that is issued by the Federal Reserve.
In the 2018 Federal Reserve report, it is stated that if a $400 unexpected bill were to arise, 61 percent of Americans would have the resources on hand to cover the expense. Evidently, some segments of the media interpreted that statistic to mean that the other 39 percent of the citizenry would be unable to pay such a bill.
In the same Federal Reserve report, however, it is mentioned that some people would pay such an expense by borrowing money from someone they know, and others would use credit cards for payment.
It is also mentioned how some people might still borrow money even though they have enough money in the bank to cover an unexpected bill.
The Federal Reserve report said that 85 percent of respondents reported they would still be able to pay all of their bills if a $400 bill suddenly came along.
The Federal Reserve report determined that the actual number of adults in the U.S. who would not be able to pay an unforeseen $400 bill is 12 percent.
While he is troubled by the fact that 12 percent of American adults would not be able to cover a debt of $400, Michael R. Strain says that the accurate number is quite different from the 39 percent figure that has been reported extensively.