The percentage of Americans who say they live from one paycheck to the next rose last year, and most of the new arrivals in that category were among the country’s higher earners. has been shown in research.
About 64% of U.S. consumers (equivalent to 166 million people) were living check-to-check by the end of 2022, according to a trade publication study. Pymnts.com and Lending Club.
That’s a 3 percentage point increase from 9.3 million Americans a year ago. And of that group, about 8 million people made more than $100,000 a year. More than half of its income cohort said they were living check-to-check in December, up 9 percentage points from the previous year.
The numbers likely reflect skyrocketing costs of living, wages not keeping up, pandemic savings declining, and a growing strain on household budgets.
More pressure is likely this year, with less than half of survey respondents expecting earnings to catch up with inflation.
“The outlook for consumer spending is uncertain,” said Lydia Busseur, senior economist at EY-Parthenon.
“Rising prices, declining personal savings, and an increasing reliance on credit points have led to weak consumer spending this winter.
“These dynamics will be exacerbated by the negative wealth effect from falling stock prices and falling house prices.”
Other indicators point to some degree of economic stress as well. Consumer sentiment has risen from his 2022 low, but is still well below pre-pandemic levels, according to the latest University of Michigan survey. Fourth-quarter economic growth data released last week highlighted a slowdown in household spending.
Inflation-adjusted disposable income remains below levels at the start of the 2020 pandemic, according to the Bureau of Economic Analysis, indicating that consumers haven’t seen an increase in real income for three years.
The label doesn’t necessarily mean people are falling behind in paying their debts, but research suggests that number is on the rise.
We found that 24% of respondents had problems paying their bills in December. The percentage of people earning more than $100,000 and making a check-to-check living has risen from 11% to 16% the year before.
Updated: Jan 31, 2023 at 8:39 PM