According to an alarming study released this week, more than half of Americans earning six-figures admitted they lived paycheck to paycheck last year as high inflation ravaged households.
According to the poll conducted by LendingClub and Pymnts.com at the end of December, 51% of Americans with annual incomes of $100,000 or more said they were living paycheck to paycheck. The share rose 9% year-over-year, when 42% of six-figure earners admitted the same.
Overall, a whopping 64% of US consumers — equivalent to 166 million Americans — reported living on a razor-thin budget each month. That was an increase of 61%, or about 9.3 million, compared to last year’s results.
Of the 9.3 million Americans who have joined the ranks of the monthly struggle, 8 million earn more than $100,000.
“The effects of inflation are eating into every American’s wallet, and while the Fed’s efforts to curb inflation are driving up the cost of debt, we are seeing a near-record number of Americans living paycheck to paycheck,” Anuj said Nayar, Financial Health Officer at LendingClub.
“While the number of Americans living from paycheck to paycheck is nearly as high as it was in the midst of the pandemic, the causes appear to be very different as the economy does not provide protection like it did in 2020,” Nayar added.
Overall, inflation reached 6.5% in December. AFP via Getty Images
Inflation has cooled slightly in recent months but remains a major source of pressure on US budgets. Overall, prices rose 6.5% in December, while the cost of groceries rose nearly 12%, according to the CPI.
The Services Index, which includes housing, transportation and medical care, rose 7% year-on-year.
The proportion of Americans who said they had trouble paying their bills rose to 24% in December, up 2% from the same month last year, according to the survey.
Food prices have risen by almost 12% in the last month. Anadolu Agency via Getty Images
Within the six-figure income bracket, 16% said they struggled to pay their bills.
Despite some improvements in inflation, many Americans are still pessimistic about the economy. Only four in 10 Americans who admit a paycheck to a living expect their income to keep pace with inflation this year.
Additionally, 90% said their pay increases over the past year have been canceled out by higher prices.
Inflation remains a major source of pressure on US households. The Xinhua News Agency via Getty Ima
“We can expect more and more Americans of all incomes to identify themselves as living paychecks until we see the economy recover,” Nayar added. “Now more than ever, it’s critical for consumers to review their spending and build a savings cushion to prepare for the unexpected.”
The poll results are based on responses from nearly 4,000 American adults between December 8th and 22nd.
Last week, data released by the Commerce Department showed a decline in personal spending in December – a sign Americans are cutting back on purchases amid the impact of inflation.
Americans will be watching closely this week as the Federal Reserve makes its decision to raise interest rates again. Fed officials have signaled rate hikes will continue until inflation is addressed – despite concerns about a slowing economy.