NEW YORK - February 24 - Today, Tamara Draut, Director of the Economic Opportunity Program at public policy group Demos, released the following statement responding to the new report from the Federal Reserve bank based on their triennial Survey of Consumer Finances:

"This report confirms what our research has shown over the years—that growing numbers of American households face mounting debt and financial instability. Every American should be able to achieve middle class economic security, a hallmark of national and household stability in this country. But the Federal Reserve's findings spotlight trends that are causing economic fragility in today's middle class and are closing the door on low-income Americans that are trying to reach it.

"Several key indicators jump out of the new report: Over 76 percent of households carry debt, up since 2001. Of households in debt, the median amount of debt, $55,300, is a staggering 128 percent of the median US household income. A greater number of people reported not saving money in 2004 than in 2001; only 41 percent save regularly. That's a foreboding number for a nation with 76 million people reaching retirement age over the next 25 years.

"The report also shows that some populations are having more difficulty with debt than others. Findings show that more seniors are carrying debt: in the three years from 2001 to 2004, the percentage of households over age 75 holding debt increased by 11 percentage points, from 29 percent to 40 percent.

"The Federal Reserve numbers also show that credit card debt is quickly piling up for many Americans. According to the report, mean credit card debt is up 15.9 percent; median is up 10 percent. And the middle class, defined by the Federal Reserve as the fifth of the population with $42,500 median income, took on more credit card debt in recent year over any other demographic. Recent Demos research has shown why: Stagnant wages mixed with skyrocketing healthcare, education and housing costs, plus greater job instability has pushed America's families right to the limit, and they're borrowing on high-cost credit just to make ends meet.

"Home equity loans in particular became more common in those three years. Many people are using the cash-out refinancing to pay down their credit card debts and to cover expenses that income can't meet. This trend in using equity to consolidate debts was also evident in the report—30 percent cited doing so with a median balance of home secured debt at $22,000, up from $16,000 in 2001. The message is clear: Americans are keeping their families afloat by putting their greatest asset at risk.

"This report is a clarion for the American people, and our elected leaders, that we must support policies—the essential structures that bolster a fair and opportunity-rich economy—that reverse this trend and create a secure financial future for America in the 21st Century."

For more information about the Economic Opportunity Program at Demos, or to download economic-trend analysis, including The Plastic Safety Net: The Reality Behind Debt in America, a new report with findings from Demos' national debt survey, visit www.demos.org.

###