Four in 10 Americans earning more than $100,000 live paycheck to paycheck, blaming both inflation and excessive spending, according to a new report.
Those who earn less are significantly more likely to say they live paycheck to paycheck and have no money left to save at the end of the month.
Eight out of 10 people who make $50,000 or less a year say they fall into this category.
Nationwide, 61 percent of Americans live paycheck to paycheck, according to a new report from LendingClub cited by CBS News.
Compared to the previous year, this represents an increase of 2 percent.
Across America, 61 percent of people say they live paycheck to paycheck and have no money left to save at the end of the month
LendingClub found that one in 10 respondents said they had no money to save at the end of the month because of non-essential expenses.
“According to 21 percent of consumers who live paycheck to paycheck, non-essential expenses are one of the reasons for their financial lifestyle, and 10% say it is their main reason for living paycheck to paycheck,” it said in the report.
“This factor is significant: despite financial challenges and tighter budgets, consumers indulge in unnecessary spending when possible.”
Non-essential expenses include clothing, makeup, vacations, consumer goods and entertainment.
But households also came under pressure due to essential expenses.
According to the Bureau of Labor Statistics, an American worker’s average monthly paycheck before taxes is $4,766. That’s an annual salary of $57,000.
Of that $4,766, the average American will spend $3,550 on essentials.
The average rent for a one-bedroom apartment is $1,510 per month, while the average American spends $690 on groceries, including groceries and eating out.
Travel, including car payments, gas and public transportation, costs the average American $900, and healthcare costs average $450 per month.
New data released Thursday showed the Federal Reserve’s preferred inflation gauge rose last month, a sign that the central bank’s fight against price increases is not over.
Excluding food and energy prices, the price index for personal consumption expenditures rose 4.2 percent in July, compared with June’s 4.1 percent, the Commerce Department reported.
The so-called core PCE number is the one that Fed policymakers focus on in their 2 percent annual inflation target. In February 2022 it reached a 40-year high of 5.4 percent.
Last month’s increase was driven by rising prices for services, including housing and health care, while overall goods prices actually fell compared to a year ago, driven by declining costs for furniture and leisure items.
The new inflation numbers were in line with expectations and raised hopes that the Federal Reserve could halt its aggressive interest rate hikes at its next meeting in September.
Excluding food and energy prices, the price index for personal consumption expenditures rose 4.2 percent in July, up from 4.1 percent in June
“The data suggests that the inflation trend is reversing, although our estimates suggest that price pressures will ease as the year progresses,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a note to clients.
The PCE measure for all items, which includes food and energy, rose 3.3 percent on an annual basis last month, up from 3 percent the previous month.
Services recorded an annual increase of 5.2 percent – in stark contrast to goods prices, which fell 0.5 percent.
According to CME Group’s FedWatch tool, financial markets still expect an 88.5 percent change if the Fed leaves its federal funds rate unchanged.
The S&P 500 and Dow are expected to open higher following the latest inflation data, while the Nasdaq Composite edged slightly lower.
On a month-over-month basis, both PCE and core PCE rose 0.2 percent, the same monthly increase they both posted in June.
The latest data follows other recent reports suggesting the economy and labor market may be slowing enough to ease inflationary pressures.
The inflation indicator released on Thursday is different from the more familiar consumer price index shown above
For example, the number of job postings fell sharply in July, and fewer Americans are quitting their jobs to seek better opportunities.
Both trends reduce pressure on companies to raise wages to find and retain workers – a move that tends to perpetuate inflation as employers raise prices to offset their higher labor costs.
The inflation indicator released on Thursday is different from the more familiar consumer price index.
Earlier this month, the government reported that the CPI rose 3.2 percent year-on-year in July, compared to a peak of 9.1 percent in June 2022.