Inflation has taken its toll on Americans in recent years, but even as inflation has dropped from over 9% in July 2022 to 3.7% in August 2023, according to the Bureau of Labor Statistics’ Consumer Price Index, people are still struggling with their finances.
Despite consumer goods becoming more affordable, 60% of workers in the U.S. live paycheck-to-paycheck, according to a new report from Pymnts and LendingClub, with 19% struggling to pay monthly bills.
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And it’s not just people on the lower-end of the income spectrum who are finding it hard to balance their budgets. As many as 45% of high income earners ($100,000 or more) surveyed in the report are also living paycheck-to-paycheck, while 62% of those earning in the $50,000 to $100,000 range were in the same situation.
The paycheck-to-paycheck rate for those earning less than $50,000 annually was 76%, meaning only a quarter of lower-income people are financially stable.
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About half of all consumers said that their finances are particularly tight at specific times of the year, including 28% of the people who are not living paycheck-to-paycheck. The December holiday season is of particular financial stress for Americans.
Falling inflation hasn’t improved Americans financial stability.
For those who experience the worst pinch in the first quarter, utility bills are the top expense. Tax payments are the culprit for those grouped in the second quarter “struggling” category. For the third quarter, school expenses were the biggest stress factor, and for the fourth quarter it was events and celebrations.
About 36% of people who feel seasonal stress used credit cards to pay for their expenses, with 20% citing credit usage as their top strategy to make it through the season. Nearly 80% of credit card users said they could accommodate an unexpected monthly payment of $500, but 25% said it would cause significant financial stress.
What may be most concerning is the fact that the 60% paycheck-to-paycheck figure is about the same as last year, when inflation was more than twice as bad as it is now.
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