important insights into how assets and liabilities of middle - income households affect their economic security. research based on the 2016 scf shows that only about one - fourth of middle - income households have enough liquid savings to cover six months of expenses — the amount often recommended by financial advisers — and only 4 in 10 could cover three months of expenses. 9 the majority of middle - income households thus do not have sufficient liquid savings to weather a typical material financial disruption — for instance, one associated with a temporary job loss or illness. even modest unexpected expenses could be disruptive for many middle - income families. according to the forthcoming results from the 2018 shed, one - third of middle - income adults said that they would borrow money, sell something, or not be able see neil bhutta and lisa dettling ( 2018 ), “ money in the bank? assessing families ’ liquid savings using the survey of consumer finances, ” feds notes ( washington : board of governors of the federal reserve system, november 19 ), https : / / doi. org / 10. 17016 / 2380 - 7172. 2275. in this study, “ middle income ” refers to households with income between the 25th and 75th percentiles. income is defined as the “ usual amount ” of income the household earned in the previous year and could differ from the actual amount. overall expenses are estimated using partial data on household expenses, including rent, mortgages payments, car loans, and food. - 6to pay an unexpected $ 400 expense ( figure 5 ). 10 drilling down further indicates that while 6 percent of middle - income adults said they would not be able to pay the expense using any means, 27 percent would borrow or sell something to pay the expense. the reliance on credit to meet unexpected expenses is pronounced among those already carrying a balance on their credit cards. nearly 3 in 10 middle - income adults carry a balance on their credit card most or all of the time, and the same households are five times as likely to borrow if faced with a $ 400 expense as those who never carry a balance. borrowing money is not the only way that middle - income households cope with unexpected expenses. in 2018, one - fourth of middle - income adults said they skipped some kind of medical care because of its cost, suggesting insufficient savings can have implications for physical health as well as financial health. thus, low levels of savings can create a challenging cycle when material disruptions in income, or even smaller unexpected expenses,

- the - rule - oflaw. html ( quoted text under the heading “ aristotle ’ s politics ” ). - 2there are a number of ways to define middle income. i will primarily focus on households between the 40th and 70th percentiles of the income distribution. in 2018, these households had incomes between $ 40, 000 and $ 85, 000. 3 to explore the issues associated with financial resilience and intergenerational financial well - being, it is necessary to go beyond measures of income and better understand household assets and liabilities. today i will share with you findings from a promising new data resource developed by federal reserve staff, the distributional financial accounts ( dfas ). these accounts combine household - level data on balance sheets, incomes, and demographic characteristics of families in the united states from the triennial survey of consumer finances ( scf ) with aggregate data from the financial accounts of the united states to track the distribution of these household assets and liabilities on a quarterly basis. 4 the timeliness of the data, which are currently available through the fourth quarter of 2018, can provide valuable insights into how different types of households are faring over the business cycle. i will also share some new results from the 2018 survey of household economics and decisionmaking ( shed ), which deliver further insights on the financial resilience of this definition errs slightly on the higher side of what might be considered middle income, but the results are qualitatively robust to taking the middle third of the income distribution. for more details on the construction of the dfas, see michael batty, jesse bricker, joseph briggs, elizabeth holmquist, susan mcintosh, kevin moore, eric nielsen, sarah reber, molly shatto, kamila sommer, tom sweeney, and alice henriques volz ( 2019 ), “ introducing the distributional financial accounts of the united states, ” finance and economics discussion series 2019 - 017 ( washington : board of governors of the federal reserve system, march ), https : / / doi. org / 10. 17016 / feds. 2019. 017. the publicly available dfas data can be found on the board ’ s website at https : / / www. federalreserve. gov / releases / efa / efa - distributional - financial - accounts. htm. visualization tools for the data are forthcoming. - 3households, particularly those with low and moderate income