Americans Are More Secure

Fewer households are experiencing economic insecurity, according to the Economic Security Index, a project that measures the share of households that have experienced at least a 25 percent drop in their economic resources in the past year. In 2011, 18.9 percent of households experienced that kind of plunge in their household resources, down from 20.2 percent in 2010. This is "the largest year-over-year decline in the last quarter century," according to ESI. The 18.9 percent of households that were insecure in 2011 was the smallest since 2005.

The Economic Security Index tracks the percentage of households that experience a decline of 25 percent or more in their household income after paying for medical care and servicing their debt and who lack the savings to replace their lost income. 

What explains the 2011 decline in the ESI--or, in other words, the increase in the percentage of households that are financially secure? One factor is that we may have hit bottom. Once a household has lost much of its income, it doesn't have much farther to fall. Another reason is that household income has stabilized and household debt has fallen.   

Despite the 2011 decline in insecure households, the level of insecurity remains far above what it was in 1986--the first year included in ESI's analysis. In 1986, only 14.3 percent of households were economically insecure. The figure peaked at 20.5 percent in 2009.

Source: Economic Security Index, ESI Update: Economic Security Improves in 2011