With one government shutdown ended and another possibly on the horizon, many stories of hardship suffered by the families of employees who were either furloughed or had to work without pay were brought to prominence. But two interrelated statistics are telling: Four out of 10 adults cannot cover an unexpected expenditure of $400 without selling something or borrowing. And a staggering 78 percent of American workers live paycheck to paycheck. These pieces of information are worrisome in the long run.
They highlight the lack of resilience many American families suffer from when they encounter unexpected events, or experience "shocks," in economic parlance. The recent government shutdown was only one example of an unexpected occurrence that was beyond the control of those affected. And a shutdown could happen again if an agreement to keep the government open is not reached by February 15th. But families are also buffeted by many more shocks on a routine, less-publicized basis: job change and loss, illness, needed home and auto repairs, and damage caused by weather events, to name just a few.
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