Sav­ings ac­counts of many Amer­i­cans lean

Milwaukee Journal Sentinel - - News - Tom Kertscher

For­mer Star­bucks chief ex­ec­u­tive Howard Schultz told CBS’ “60 Min­utes” that he’s “se­ri­ously con­sid­er­ing” a 2020 run for the White House.

The self-de­scribed life­long Demo­crat, who de­vel­oped a rep­u­ta­tion as a so­cially con­scious leader while over­see­ing the cof­fee mega-com­pany for 32 years, told CBS cor­re­spon­dent Scott Pel­ley Sun­day that he would run as a “cen­trist in­de­pen­dent out­side of the twoparty sys­tem.”

At one point in the in­ter­view, the bil­lion­aire re­flected on the fi­nan­cial stresses that he says mo­ti­vate him to run for the na­tion’s top of­fice. “When I read sta­tis­tics that say that over 40 per­cent of the Amer­i­can peo­ple don’t have $400 in the bank and only a cri­sis away from bank­ruptcy … this is what I think about.”

The claim stood out as a stark de­scrip­tion of ev­ery­day life in Amer­ica, so we wanted to know if it was ac­cu­rate. Our re­port­ing found that Schultz’s claim is on the right track, although he over­stated it a bit.

This is not the first time we have checked a claim about Amer­i­can fi­nances from Schultz’s shop. In 2015, Star­bucks pub­lished an eight-page in­sert in USA To­day ex­plain­ing why it wanted to start a na­tional con­ver­sa­tion about race. It in­cluded this statis­tic: “White peo­ple con­trol al­most 90 per­cent of the na­tion’s wealth.” We rated it True. It matched the lat­est net worth fig­ures from the Fed­eral Re­serve Sys­tem at the time.

Heard that ‘40 per­cent’ be­fore?

Schultz’s 40 per­cent state­ment re­minded us of some­thing for­mer Washington Post re­porter Hunter Sch­warz said in 2015 be­fore join­ing CNN. Sch­warz said that 47 per­cent of Amer­i­cans

“can’t pay for an un­ex­pected $400 ex­pense through sav­ings or credit cards, with­out sell­ing some­thing or bor­row­ing money.” Pun­ditFact rated that claim True.

As our col­leagues re­ported, Sch­warz’s state­ment was based on re­sults of a na­tion­ally rep­re­sen­ta­tive sam­ple of Amer­i­can adults who com­pleted an on­line sur­vey in Oc­to­ber 2014 by the Fed­eral Re­serve Board. When asked how they would pay for an emer­gency ex­pense of $400, 53 per­cent said they would be able to pay es­sen­tially im­me­di­ately, while 47 per­cent said they could not.

But that’s based on a sur­vey taken more than four years be­fore Schultz made his state­ment, and the re­porter’s state­ment was some­what more pre­cise.

So, let’s dig in.

Newer fig­ures

We didn’t hear back from Schultz’s of­fice about what he used as the ba­sis for his state­ment. But the Fed has done its sur­vey, in what is known as the “Re­port on the Eco­nomic Well-Be­ing of U.S. House­holds,” each year since 2013. And the most re­cent re­sults, re­leased in May, got cov­er­age from NPR, CNBC, Forbes, Fox Busi­ness and other na­tional me­dia.

The new sur­vey, con­ducted in Novem­ber and De­cem­ber 2017 with more than 12,000 re­spon­dents, found that:

“Four in 10 adults, if faced with an un­ex­pected ex­pense of $400, would ei­ther not be able to cover it or would cover it by sell­ing some­thing or bor­row­ing money.”

So, that isn’t di­rect ev­i­dence that 40 per­cent of Amer­i­cans don’t have at least $400 in a bank ac­count.

But, based on the sur­vey, the 40 per­cent didn’t have that much in their check­ing or sav­ings; or, they said they would re­sort in­stead to bor­row­ing or sell­ing some­thing to cover the ex­pense.

The Fed noted that 40 per­cent was an im­prove­ment from half of adults in 2013 be­ing ill-pre­pared for such an ex­pense.

Two points worth not­ing be­fore we close:

❚ An April re­port by the Global Fi­nan­cial Lit­er­acy Ex­cel­lence Cen­ter at Ge­orge Washington Univer­sity found that 36 per­cent of the pop­u­la­tion couldn’t come up with $2,000 within the next month to cover an emer­gency ex­pense — a mea­sure the re­port said is sim­i­lar to be­ing able to come up with $400 im­me­di­ately.

❚ Given the drop in un­em­ploy­ment and gen­er­ally good econ­omy, the fig­ure might now be lower than the 40 per­cent cited in the Fed sur­vey, Marquette Univer­sity emer­i­tus eco­nom­ics pro­fes­sor Ab­dur Chowd­hury told us.

Our rul­ing

Schultz said “over 40 per­cent of the Amer­i­can peo­ple don’t have $400 in the bank.”

Based on the lat­est sur­vey from the Fed­eral Re­serve Board, Schultz is es­sen­tially on track: 40 per­cent of Amer­i­cans said that if faced with an emer­gency ex­pense of $400, they would not be able to cover it or would have to bor­row or sell some­thing in or­der to cover it.

We rate Schultz’s state­ment Mostly True.


Star­bucks founder Howard Schultz says many Amer­i­cans — if faced with an emer­gency ex­pense of $400 — would not be able to cover it.

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