Problems a Booming Economy Can’t Solve

The problem is not a financial problem but a moral one.

By John Horvat, II Published on July 19, 2018

A booming economy should help people make good financial decisions since more money can be directed to other needs. That is why savings rates normally go up as the economy improves. People naturally tend to take advantage of better days especially after bad or slow times.

This is not happening now. Many Americans are spending more on consumer goods, but they are not saving their money or accumulating wealth.

No Emergency Funds

Nearly a quarter of households, for example, do not have any available emergency funds according to a survey conducted by the SSRS research firm. Another third do not have any wealth or have negative wealth outside the value of their homes. There are no signs of change on the horizon.

Such facts should set off alarm bells. However, it appears most people continue their spending habits. The survey shows that most situations have changed little or even worsened despite good times. In fact, sixty-two percent of those surveyed said they were somewhat or very comfortable with their emergency savings. This comfort was shockingly shared by one in five of those who have no emergency savings. The report laments that “many families are living on a knife’s edge, yet not resolute to do anything about it.”

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Such statistics are more than just numbers. There are always those who experience hardships and are struggling to do something about it. This does not seem to be the norm. Most prefer not to worry about their financial future. They are optimistic and believe misfortune will not visit them. Yet others believe they can rely on others to help them. They think family, friends or government will see them through troubles.

Gone are the days when everyone practiced thrift to save for rainy days. The recommended savings norm has always been to put away enough to cover at least six months of normal expenses. The survey showed that only 29 percent of Americans have this safety buffer. This is down from 31 percent in 2017. Other categories between no savings and six months showed only very slight improvements.

Rich and Poor

The findings appear in unexpected categories. It appears that savings is not necessarily a function of income. Rich people join poor in this mindset that embraces all income levels.

Thirty percent of younger baby boomers between 54 and 63, for example, have no emergency savings as they approach retirement. One in four of the highest income households have no savings or enough to cover less than three months.

Millennials in general were the least likely to show concern for their emergency savings. A quarter of both millennials (age 18 to 37) and Gen Xers (38 to 53) have no savings. Roughly another quarter of both generations have less than a three-month buffer. Such savings put them in a precarious position since this is the prime time for forming families and building wealth.

The Virtue of Providence

The problem is not a financial problem but a moral one. It involves the virtue of providence, which is the foundation of any vibrant economy.

Providence involves the habit of exercising foresight by adapting means to an end. This might be seen in the case of parents who save money for their children’s education. It is found in those who budget their money to include savings. It calls for delaying gratification to secure the future. A society that fails to practice foresight is living on borrowed time.

Human providence mirrors the action of Divine Providence by which God governs the universe and directs the course of the affairs of humanity with purpose and benevolence. The very term reflects this goodness since Providence provides for necessities over time. When things become difficult, people can rely upon God to come to their aid.

However, Divine Providence requires that people cooperate with God’s loving protection by exercising their own foresight and diligence. The idea that God helps those who help themselves is vital to any healthy social order.

Thus, a booming economy can solve many things. It can provide jobs and opportunities. It can supply abundance and choice to help people enjoy the fruits of their labors.

However, there are other things that a booming economy cannot provide. It cannot guarantee wise choices when virtue is not practiced. Boom times can even lead to a party economy that throws caution to the wind and favors improvidence and recklessness.


John Horvat II is a scholar, researcher, educator, international speaker, and author of the book Return to Order, as well as the author of hundreds of published articles. He lives in Spring Grove, Penn., where he is the vice president of the American Society for the Defense of Tradition, Family and Property.

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  • Andrew Mason

    If, or rather when, the tough times come – another depression, many people are really really going to struggle. America may be safe during the Trump years but countries such as Australia or Britain – which have similarly improvident people, but more distressed economies, are likely to suffer a lot of pain in the next few years. How will Millennials cope when they lose their houses and can’t afford coffees, manicures, and other fundamental human necessities?

    • porcupineman1454

      You’re delusional if you think millennials can already afford houses and pedicures.

      • Andrew Mason

        Of course they can. Don’t you know any with their own houses, or even investment properties?

        • porcupineman1454

          No. I don’t. I have a wide circle of friends of many ages and all education levels, including several millennials, and the most successful of them are the ones who can afford to keep the lights on and food on the table in their small apartments. What I have seen from this generation in particular – and what will unfortunately likely follow it with Gen Z – is that struggling and living paycheck-to-paycheck is the norm. Inflation, outrageous costs of living, and student debt have ensured it.

          Of course, as always, the most successful are the most frugal – but living with no luxuries whatsoever simply so you can afford to eat is not the American dream as I remember it, and it is certainly not what my generation who grew up in the 70s and 80s experienced as a whole. Poverty is accepted as the norm today among many, and it’s sad and frightening to see.

          Perhaps it’s simply the geography of the neighborhood, however. I don’t live in a wealthy area by any means, and I assume that you do.

          • Paul

            “but living with no luxuries whatsoever simply so you can afford to eat is not the American dream as I remember it, ”

            I see the American dream completely differently. It is the opportunity to work hard, be wise, take risk and succeed. There was a time all I could afford to eat was rice. My financial focus was not on what luxuries I could afford but on saving money to get our first house to get out of the horrible debt of rent. We sold a car to reduce our expenses and save more. We stopped using the coin op dryer and hung our clothes to dry in our 1 bedroom apartment. Our bed was a matress on the floor. We were living the American dream and still are. Our focus is not on luxuries but rather assets. Those are things that work for you, everything else is a liability. Too many squander on the latter and neglect the former.

            Most folks have the wrong idea about success and money. A great book in that regards is Rich Dad Poor Dad by Robert Kiyosaki, I highly recommend it if you want an entirely new perspective from the kind of life we are sold in media or in public school.

          • gladys1071

            I guess it depends on what people value. My husband and I are more middle of the road. We have one old car (14yrs old) and 1 new car. We take a long time to upgrade or get new things, usually wait until they break.

            So we do hold on to old things for a long time and eventually get them replaced. We do like to travel on the weekends to National parks and such, experience new places.

            We value experiences more than flashy new things, and don’t mind spending money to travel some.

            We try to be balanced on not spending too much or uncessarily and or being too frugal where life is no fun.

          • Paul

            I hear you but I’m talking about something quite different. I would encourage again to read the book Rich Dad Poor Dad, it gives an entirely different perspective on money than most folks have. It’s less than $10 on amazon.

          • Andrew Mason

            Actually I’m assuming something akin to the opposite – that you live somewhere like New York, or San Francisco where prices are indeed outrageous. I’m aware that some Millennials forego home ownership and instead choose to rent and enjoy international travel, but that’s not most – at least I don’t think it is.

            One young gentleman I know who went straight into work after school, married young, and has a growing family, has owned his own home for oh something like a decade. Those who kept on studying and became accountants, teachers, statistician etc may be a bit slower to acquire property, but so long as the work is constant they’re getting there. It’s mostly those who are unable to find reliable work that struggle, at least in my experience – a PhD stuck in casual (nonqualified?) work and living in the city core, or a ‘pizza delivery boy’ living at home on the city edge. Of course the core costs twice what areas further out do, while the fringe is probably closer to half the average price. Housing should be possible so long as you don’t waste your money and have permanent employment.

  • Paul

    There’s an abundance of baby boomers as well who lack serious assets and emergency funds, this is nothing new.

  • Irene Neuner

    I agree with the article but inflation is eating away at everyone very fast. We save extensively 401K, 529, and 6 month emergency but know that the value of money is going down each year. Further the millenials know the financial system is a “house of cards” or held up supernaturally however you like to look at it. Few thoughtful and honest people have faith in our system.

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