Personal Finance

American dream is not dead

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Rumors of the American dream being dead have been greatly exaggerated.

To that point, 63 percent of Americans believe they are living the American dream, according to a recent report, up from 59 percent in 2011.

More Americans also credit determination and hard work as the most important success factors in their financial well-being than in the report's recent history. The Allstate/National Journal Heartland Monitor poll reprise the same questions each year to compare sentiment now to sentiment during and after the Great Recession.

"When it comes to getting ahead, more people than ever think it's their own talents and hard work," noted Joseph McMahon, the poll's lead researcher. "There's a belief it's on you as an individual to make it happen."

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No doubt for those trying to get by, it's been a rough ride. There are also signs that plenty of people still feel under financial pressure.

Almost half, or 45 percent, of those polled rated their personal financial situation as excellent or good, which was a three-year high. However, 54 percent said their personal financial situation was only fair or poor.

During the recession, 59 percent were confident they had enough of a financial cushion in the event of a job loss or significant decrease in income, but fewer said the same in 2016. Nearly half of the respondents said they still find it difficult to save for retirement. Another 15 percent said it was hard to make ends meet every month.

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"There's a contradiction going on here," said Alec Levenson, a professor of economics at the University of Southern California's Marshall School of Business. With low unemployment but sluggish wage growth, the economy has been growing at a steady but slow rate since the recession.

"This is the economy that continues to stump us in terms of which direction we are heading," he added.

"We have people who are worried about their future and people who think they are fine. One reason is because they are paying down debt, so they don't have as much cash on hand," Levenson said. "In economic terms, they are in better shape, but until they get out from underneath that debt entirely, they won't feel more financially secure."

In fact, nearly twice as many Americans said that personal debt is an obstacle rather than a stepping stone to achieving the American dream.

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Fifty-seven percent of those polled said easy credit encourages people to spend beyond their means, ultimately burdening them with high levels of debt and years of interest payments, compared to just 36 percent who said it makes it possible to pay for college, start a business, buy a car and purchase a home.

Still, 42 percent of the people surveyed said they expect their financial situation to improve in the next year, up slightly from 37 percent six years ago.

"The thing about this country, even in the midst of things not going that well economically, there's this strong spirit," Levenson said, adding, "That's always been one of the things that made America resilient."

The Allstate/National Journal poll surveyed 1,000 adults in January to measure changes in opinions and attitudes.