According to a new report released by the Corporation for Enterprise Development, almost half of U.S. households don't have enough savings for emergencies, college tuition, health care and housing, reports BusinessInsider.com.
The report, entitled 'Assets & Opportunity Scorecard,' says that 132.1 million people wouldn't last three months if their income stopped. The report also said more than 30 percent of Americans don't even have a savings account.
More than 25 percent of families earning $55,465 - $90,000 annually have less than three months of savings, while another 25 percent of households are considered "net worth asset poor," meaning their assets (a home, business or car) are worth far less than their total debt amount.
The household median net worth has declined by more than $27,000 since 2006, while the cost of housing, food, and education have soared.
To make matters worse, whenever consumers can't cope with costs, they rely on credit cards. The average borrower carries more than $10,700 in credit card debt, and one in five households rely on high-risk financial services such as payday advance.
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When Americans do not have money to spend, businesses have to lay off more workers, who become unemployed and cannot spend as much money as they normally would on goods and services. So it becomes a repeating cycle of money receding away from the marketplace. When money recedes from the economy like this, it is called a recession.