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Don’t be fooled. Despite what politicians and the media have led many to believe, struggling middle-class Americans are not in a real recovery. The latest evidence is in a report released this month by the Investor Education Foundation of the Financial Industry Regulatory Authority (FINRA), which is an arm of the securities market. It focused on the financial capacities of American adults in 2012 compared to 2009.

Here are a few grim facts from the study, based on online surveys of 25,000 adults:

  • 29 percent of respondents indicated they had experienced a large unexpected income drop. Younger respondents are more likely than older respondents to have experienced a drop in income (34 percent of 18-34 year olds, compared to 22 percent of those 55 and up).
  • 42 percent of respondents feel that they have too much debt.
  • 55 percent of those surveyed have nothing left over after meeting their monthly expenses; 19 percent actually spend more than their income. Only about four in 10 respondents percent report spending less than their income. These percentages have not shifted meaningfully from 2009.
  • Not surprisingly, therefore, 56 percent of respondents say they have not set aside enough money to cover expenses for three months in case of sickness, job loss, economic downturn or other emergency. Only 40 percent say they have a three-month cash reserve.
  • When asked if they would be able to come up with $2,000 if an unexpected need arose in the next month, nearly two in five respondents (39 percent) said they probably or certainly could not.
  • 14 percent of non-retired respondents report having taken a loan from their retirement account in the past year, and 10 percent a hardship withdrawal.
  • More than one out of five mortgage holders have been late with a mortgage payment at least once in the past two years (8 percent only once, and 13 percent more than once). Among African-American homeowners with mortgages, 39 percent having been late at least once (13 percent once, and 27 percent more than once).
  • 22 percent of respondents with checking accounts say they have occasionally overdrawn their accounts.
  • 26 percent report having unpaid bills from a healthcare or medical service provider that are past due. Among those without health insurance, the number rises to 38 percent.
  • Younger respondents, particularly those 18-34, are much more likely to use a check-cashing store, as are those with less than $25,000 in income, and African-American and Hispanic respondents.
  • One quarter of homeowners aged 18-34 are underwater (owing more on their mortgage than their home is worth), compared to only 8 percent of those 55 and older.
  • Among those with student loans, 54 percent are concerned that they will not be able to pay off their loans.

These survey results are not surprising when you consider the context. Adjusted for inflation, half of all Americans lucky enough to have a job now earn less than they did a decade ago. Additionally, over the last 44 years earnings for the majority of Americans have barely budged. As the middle class has been hollowed out, inequality has run rampant and poverty has risen. Nearly 15 percent of Americans are now on food stamps.

Nearly 20 million people are still unemployed and underemployed, and over the last year the U.S. has only added an average of 168,000 jobs per month. If our anemic economy is allowed to persist we won’t reach full employment until somewhere around 2020.

So why are Americans so optimistic at a time when the economy remains persistently weak? A solidifying housing market. Data released on Tuesday shows that home prices jumped 10.9 percent in March. This is the largest increase in seven years. And just this month consumer confidence hit a remarkable five-year high.

Americans need to beware, though: Much of the rise in home prices is due to purchases by hedge funds and private equity investors, not the middle class. At its current pace, the rise in housing prices is unsustainable as personal income has yet to increase and individual savings are down. An overvalued market is the last thing we need when thousands of Americans are still drowning in underwater mortgages.

It’s true that a solid housing market is vital to a recovery, but the current rise has yet to create the jobs needed to facilitate a full recovery. New-home construction, which would create jobs while pushing prices down, is far below needed levels, analysts say. Thus far, the housing sector has added 0.7 percent of gross domestic product, just enough to essentially cancel out the macroeconomic effects of the sequester. Since the housing market only represents 2.7 percent (as of the first quarter of 2013), it would be foolish to believe that this sector could pull the entire economy up with it.

Although the FINRA report shows the strength and resiliency of the American people, it also signifies that little has changed since 2009. Americans are being sold a “recovery” that’s actually a trap. The government should not pursue policies that inflate the economy, but ones that rebuild it. Let’s create jobs and get America back to work.

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