Here’s more about the study from EurekAlert!, a science and technology news site.

Unemployment rates topping 10 percent are the highest in 26 years. Families are working more hours and taking on more part-time jobs. At the same time, unemployment benefits are running out for many families. Faced with the worst recession since the Great Depression, many U.S. families have no choice but to draw on inadequate savings to pay for essential household expenses. Many of these families are at risk of losing their housing. They may also cut back on food and healthcare to make ends meet.

The report, from Brandeis’ Institute on Assets and Social Policy, tried to measure families’ asset holding to their ability to pay for essential household expenses and also to invest in future opportunities for mobility, such as a home purchase, business start-up, retraining, or education. The report also showed that less than half of all families have sufficient savings to address essential expenses and invest in opportunities for mobility when faced with a job loss. And things get worse from there:

Moreover, many more households of color lack the financial assets to meet their expenses during periods of unemployment. Sixty-six percent of African American and Latino households are not asset secure, and only 20 percent of households of color have financial assets to invest in opportunities for mobility. While most American families lack sufficient wealth to invest in education, housing, business ventures, or training for better jobs, the dramatic distance that marks families of color is a reflection of the profound, deep, and systematic racial wealth gap.

Instead of moving to create jobs, Congress took action recently to extend the first-time homebuyer tax credit and to give homebuilders a big tax break.  Hopefully a glimpse of the harsh realities experienced by unemployed workers and their families will entice lawmakers to pass legislation that will produce many more much-needed jobs, instead of propping up home prices and paying off interest groups.

Consider the Boise, Idaho couple profiled in the Journal story:

Rick and Noreen Capp recently reduced their credit-card debt, opened a savings account and stopped taking their two children to restaurants. Jessica and Alan Muir have started buying children’s clothes at steep markdowns, splitting bulk-food purchases with other families and gathering their firewood instead of buying it for $200 a cord.

Previously, the Capps counted on rising home values to take out money for cars, vacations, fiddle lessons for their daughter and $900 ski passes. That must have been some ski trip.

But like the Capps, Americans aren’t going down that road anymore. Economists expect the savings rate to increase to as much as 5 percent this year, the most dramatic reversal since World War II, the Journal said.

And what’s wrong with that? Haven’t consumers been told they need to be more responsible about debt and spending – the lesson of the financial crisis? Here’s the problem, the Journal explains:

Usually, frugality is good for individuals and for the economy. Savings serve as a reservoir of capital that can be used to finance investment, which helps raise a nation’s standard of living. But in a recession, increased saving — or its flip side, decreased spending — can exacerbate the economy’s woes. It’s what economists call the “paradox of thrift.”

There’s no easy answer here. It would be irresponsible for policymakers to urge people to go to the mall and spend again – that was the path President George W. Bush followed in 2001, and look where it got us. If politicians don’t take shortcuts, it’s true the recovery will take longer and be more painful than in the past – but consumers will come out of it in stronger shape financially. That will be worth more in the long run than artificially propping up the economy with overspending.

We’ll see, as the stimulus plan gets put together, which path President-elect Barack Obama and Congress will take this time around.