all households are unable to pay their current month ’ s bills in full, nearly one - third would rely on borrowing or selling something to cover a $ 400 emergency expense, and one in eight would not be able to cover a $ 400 emergency expense by any means. over half of households lack savings to cover three months ’ expenses if they lost their main source of income. 17 this finding corroborates the evidence found in the financial diaries of low - to moderate - income families that show it is all too common for households to have no shortterm savings to cover emergencies. according to the survey of consumer finances, on average from 1989 to 2013, about 80 percent of households in the bottom quintile of the income distribution had less than $ 3, 000 adjusted for inflation in liquid assets ( cash, checking, or savings accounts ). even among households in the middle quintile of income, about half do not meet this threshold for liquid assets. in addition, the financial crisis demonstrated that household financial imbalances can have important consequences for overall financial stability in extreme circumstances. the rapid and widespread rise in poorly underwritten mortgage debt prior to the great recession is widely viewed as a key contributor to the financial crisis. 18 this suggests the potential value of better understanding the specific patterns in household finances that would give an early warning of a crisis. in carrying out our responsibilities to monitor and safeguard the stability of the financial system, although much of the work has see board of governors ( 2017 ). see, for example, rajan ( 2010 ) ; dynan ( 2012 ) ; and mian, rao, and sufi ( 2013 ) on how high levels of mortgage debt may have made the great recession more severe and slowed the recovery. while lowincome households were particularly vulnerable to the consequences of the collapse in house prices, rise in unemployment, and tightening of credit in the great recession, the preceding rise in mortgage debt was widespread, also including higher - income households, as documented by bhutta ( 2015 ) and adelino, schoar, and severino ( 2016 ). - 8focused on marketwide risks, core financial institutions, and macro - level shocks, we are also developing a more granular understanding of the distribution and strength of household balance sheets. 19 progress on this frontier is being aided by greater access to timely, account - level, and geographically specific data on consumer credit, mortgages, and spending, although more research in this area

for future generations. 41 in some parts of the country, rural residents and small businesses also face increasing challenges in accessing financial services as small community banks close and larger banks close branches in low - population areas. consequently, as i learned from the mayors of itta bena and moorhead, mississippi, some rural residents, small businesses, and even municipalities have to drive long distances to reach a bank. 42 in the mississippi delta, community development financial institutions ( cdfis ) such as hope credit union and southern bancorp are acquiring bank branches earmarked for closing in order to maintain financial services for some rural communities. 43 although both pockets of opportunity and of persistent poverty are found in large metro and rural areas alike, 44 a greater share of the new jobs and business establishments created in the recovery following the great recession have been in larger metro areas than was the case in previous recoveries. 45 in countless communities, especially in rural towns and small to midsize cities, we have seen how a deep setback can leave a profound and long - lasting mark. these experiences challenge common assumptions about the ability of the economy to recover from an economic setback. this could be the legacy of community visits in el paso ( 2016 ), mississippi delta ( 2016 ), and eastern kentucky ( 2017 ), discussions with mayor collins of itta bena, mississippi and mayor holland of moorhead, mississippi ( 2016 ). community development visit in mississippi delta ( 2016 ). see goetz, partridge, and stephens ( 2017 ). see economic innovation group ( 2016 ). - 15 concentrated reliance on an industry that experiences decline due to trade or technology or the byproduct of lack of connectivity - whether by highways or broadband. technological change, globalization, and other shifts in demand and costs are not new to the u. s. economy, but there are troubling signs that less diversified or more isolated localities have diminished ability to recover. and there is increasing evidence that such concentrated economic shocks can also lead to severe labor market stress, as well as broader consequences for health and mortality. 46 over the past 30 years, the convergence in income across regions of the country has slowed dramatically. 47 even so, some localities fare better than others in establishing new paths to opportunity and inclusive growth, and their successes provide actionable lessons. the boston fed ’ s working cities challenge undertook an in depth study of 25 medium - sized cities nationwide that had experienced a post - industrial decline and identified 10 that experienced an