Kitchen Table Economics: Nick Bourke

Video: Nick Bourke of the Pew Charitable Trusts delivered the opening overview at Washington Post Live’s Kitchen Table Economics forum.

This is part of the Post Live panel discussion ‘Kitchen Table Economics,’ held April 16 at The Washington Post. View other videos from the discussion here.

Nick Bourke

Video

Nick Bourke of Pew discussed numbers about how much money Americans are saving.

Nick Bourke of Pew discussed numbers about how much money Americans are saving.

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Director, Safe Small-Dollar Loans Research Project, the Pew Charitable Trusts

Some research is showing that consumers are starting to spend more. They’re feeling more optimistic, and that is good for the economy.

Let’s talk a moment about savings.

Our friends in the Czech Republic, Australia, Belgium and especially Germany, households there are saving a lot more of their disposable income than U.S. households. The German savings rate is about double what the U.S. rate is by the OECD’s measure. But our friends in Canada and Japan and the Nordic countries are saving a lot less of their disposable income. And interestingly, the trend in the U.S. seems to be that the recent peak in household savings was around 2010, and it’s starting to decline again.

About one-third of all U.S. households lack enough liquid assets to be able to live for three months at the poverty line.

Similarly, half of all U.S. households in the survey said that they probably could not or certainly could not come up with $2,000 within 30 days if they needed to. Almost half of households in this country. The phrase that has emerged to talk about this situation is financial fragility. And it is a real issue in this country, and it’s something that those of us who care about the consumer financial balance sheet are really watching.

There’s some other interesting research out there that talks about how everybody makes mistakes. Everybody is a non-optimal financial decision-maker at one point . . . and a lot of people fortunately in this country do have the wherewithal to withstand those financial mistakes. But a lot of people don’t.

How can we help address this situation? I think a lot of it does come down to helping consumers and households to understand and manage their risk. That means that they need more of an awareness of risk, an awareness of a need to protect against risk, and the importance and the benefit of developing even minor cushions to protect against risk.

A mistake can be buying a home when you’re not ready to afford it. But a mistake can also be buying a home and then getting a mortgage that has points when you can find a mortgage that doesn’t.

 
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