Government statistics don’t accurately portray the financial health of American families, expertsIMAGE BY GETTY
By Ted Knutson
The financial health of Americans is not being reported clearly by the federal government, a range of experts told a webinar from a Washington think tank today.
A new, holistic number combining the interrelationships and interactions between families’ spending, saving, borrowing, and planning was offered as a solution at the Brookings Institution session.
No single economic indicator that gives us the reality families are facing, JPMorgan Chase Office of Corporate Responsibility Director of Financial Health Sarah Willis Ertur told the virtual meeting.
The numbers the government is currently putting out are fragmented, misleading and give too rosy of a picture of financial well-being in the country, asserted Gene Ludwig, author of The Vanishing American Dream.
“(The numbers) do a poor job of assessing Americans’ financial health. Middle Americans are in dire straits,” said Ludwig former Comptroller of the Currency.
As an example of how poor the data is at representing the financial trouble many people are in, he noted job statistics report someone as employed who has worked as little as 10 minutes in a week.
“At the end of the day people have to have real jobs to produce wealth,” said the chair of the Promontory Financial Group who founded the Ludwig Institute of Shared Economic Prosperity.
Michael Piwowar, Executive Director of the Center for Financial Markets at the Milken Institute Center for Financial Markets said a lot of surveys don’t do what they need to do to give clear measure of financial health.
But the former Republican Securities and Exchange Commission Commissioner added he is skeptical financial health can be boiled down to one single authoritative measure.
That possibility was raised in a presentation of a new report by the Financial Health Network, a research firm.
“The time has come to establish financial health as the clear North Star for economic and social policy and for the federal government to build an effective system to measure and report on the state of financial health for the country as a whole and for those communities that historically have been discriminated against,” the report asserts.
The study said a holistic number could help measure the share of families who are financially unhealthy or struggling.
“To measure financial health and make progress in improving it thus requires a more complex set of metrics that captures within individual families not just how much money a family receives over the course of a year but, at a minimum, how it spends, saves, borrows, and plans for the future,” the authors recommend.
Last July, the group estimated one third of individuals were financially healthy.