Half of us have one month of cash cushion if laid off

Americans are in a collective state of financial depression as many admit they could cover their bills for two months at most if suddenly jobless, a nightmare more and more worry may come true.

A group of surveys found a growing number of consumers are a few paychecks away from a household collapse. Even as many scramble to shore up savings, rainy-day funds are being depleted to cover food and energy bills, mortgage and car payments.

A large number of households said they couldn't tolerate even one missed paycheck.

"This is flashing so bright-red," said Paul Ballew, senior vice president of Nationwide Insurance. "Roughly 60 percent of the population was ill-prepared (financially) before the meltdown."

A MetLife study released last week found that 50 percent of Americans said they have only a one-month cushion — roughly two paychecks — or less before they would be unable to fully meet their financial obligations if they were to lose their jobs. More disturbing is that 28 percent said they could not make ends meet for longer than two weeks without their jobs.

It isn't just low-income earners who would find themselves financially challenged. Twenty-nine percent of those making $100,000 or more a year said they would have trouble paying the bills after more than a month of unemployment.

Meanwhile, more than four in 10 respondents told pollsters in a recent Pew Research Center study that job-related issues were the nation's most important economic problem.

"Since October, mentions of other major economic issues have declined, as the public is increasingly focused on the job situation," according to the Pew study.

Since July, the study noted, there has been a spike in the numbers of families making $100,000 or more who said it was difficult to find local jobs: 73 percent compared with 40 percent eight months ago.

A Discover U.S. Spending Monitor monthly study found that consumers were becoming more despondent as each month passed.

For example, the number of people reporting they had money left over after paying their bills in February fell to 47 percent from 51 percent in January. Those thinking they would come up short in finances in the next 30 days rose to 39 percent from 34 percent, while those who said they had six months or more of reserves on hand should the paychecks stop dropped to 20 percent from 22 percent.

Not surprisingly, spending and savings patterns have shifted substantially across nearly all income levels. The Pew Center study found that, on average, 86 percent of consumers at all income levels have cut spending, though the changes differ by wage level.

For example, lower-income Americans are likely to have cut back on vacations or put off big-ticket expenses, such as home improvements or purchasing a car. Meanwhile, higher-income earners are more likely to have tweaked their retirement plans, according to the Pew Center.

The same is true even in eating behaviors, according to a recent Janney Montgomery Scott report. Consumers across the income spectrum are seeking more values, with lower-income households most likely to move to private-label brands and use coupons, while wealthier consumers were deciding to eat at home and not out, analyst Jonathan Feeney wrote in the report.

Most families, however, are paring spending because they're worried about the future, according to the Discover study. While only 30 percent said they're cutting back on dining out, vacations, cars or home goods because their financial situation has become worse, 56 percent said they are making those changes because they're anxious that their financial health will weaken considerably. That sentiment has held since December, the study found.

America's Research Group found that nearly 57 percent of the consumers it polled said they would spend less this year while virtually no one plans to spend more.

This is not just a one-year thing, according to consumers surveyed by BIGresearch. Nearly 91 percent said they see this crisis bearing down on their spending decisions — their lifestyles — during the next five years.

Fifty-five percent said they will think carefully before they make a purchase and 51 percent said they expect to be more price-conscious when buying clothing and food.

"American consumers are hunkered down, bracing for a depression," said Britt Beemer, chief executive of America's Research Group. "The dramatic drops in shopping levels have no match in our database in the last 30 years."

If there is a silver lining, it could be this: The recent stock-market rallies and a slowdown in the numbers of mass layoff announcements are encouraging signs that could bring some sense of economic stabilization.

Gallup's Consumer Mood Index, based on a daily tracking poll, increased in the past week to minus-103 from minus-116 the week before.

"The sharp improvement in consumers' mood over the past week should not be surprising," said Dennis Jacobe, chief economist for Gallup. He credited the market's surge coupled with a "concerted effort to create a positive spin on the economic outlook" by the White House and the Federal Reserve.

But it might not be enough to overcome what's already happened to millions of Americans.