The U.S. Isn’t Prepared for the Next Recession

Maybe it will start with a failed initial public offering, followed by the revelation of widespread fraud in Silicon Valley. Perhaps energy prices will spike, sapping the finances of anyone who drives a car to work. Maybe a foreign crisis will cause a credit crunch, or President Trump will spark a global trade war. A recession might seem like a distant concern, with the latest data showing that the current, extraordinarily economic long expansion just keeps humming along. But one will hit eventually, for some reason or another—that’s how economies work. And when it does, the country won’t be ready.

The average middle-class household has largely recovered from the Great Recession, which began nearly 10 years ago, in December 2007. The growing economy has started to boost earnings , and higher housing prices have done the same for net worth. The amount of debt that households owe , too. Yet millions of people remain in perilous financial shape, with little to buffer them, with a third saying they could not cover three months of expenses, even if they sold assets, dipped into retirement accounts, and asked friends and family for help. Outsize wealth and income continue to accumulate at the very top of the scale, and the finances of millions of American families . Americans are no worse off than they were when the last recession hit, in other words, but a decade of growth has not made them more secure, either.