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A LendingClub report found that 63 percent of Americans are living paycheck to paycheck, which is nearing its all-time high that was reached in March.
Anuj Nayar, LendingClub’s financial health officer, told CNBC that consumers “are not able to keep up with the pace that inflation is increasing.”
He said being employed is “no longer enough for the everyday American.”
“Wage growth has been inadequate, leaving more consumers than ever with little to nothing left over after managing monthly expenses,” he said.
Sixty-three percent of consumers were living paycheck to paycheck as of September 2022, compared to 57 percent in September 2021 and the recent high of 64 percent in March 2022, the LendingClub report said.
The problem is not limited to the poorest Americans. Six-figure earners have also expressed financial troubles.
“The share of paycheck-to-paycheck consumers has spiked among mid- to high-income earners, with 63 percent and 49 percent, respectively, claiming to live paycheck to paycheck, up from 57 percent and 38 percent, respectively, a year ago,” the report said.
The number of Americans who feel financially insecure has reached 71 percent, according to a Bank of America survey, with half falling deeper into debt. Many are attempting to maintain their habitual lifestyle using credit cards, steadily increasing their balances, CNBC noted.
“This can have detrimental consequences for someone who pays the minimum amount on their credit cards every month,” Nayar said.
The U.S. Federal Reserve has raised its key interest rate by three-quarters of a point in June, July, and September, which raises the cost of borrowing and speeds a household debt spiral for those unwilling or unable to cut back their spending. The Fed has indicated it will raise rates again at its meeting during the first two days of November.
CNBC, citing a newly released report by Salary Finance, noted that about two-third of working adults in the U.S. said they are worse off financially than in 2021.
TREND FORECAST: Inflation, rising housing costs, student debt, child care costs, and a job market demanding increasingly specialized and sophisticated skills will leave more and more Americans falling behind financially.
In September, U.S. core inflation—which excludes the cost of food and energy—rose 6.6 percent, year over year, the sharpest annual jump since August 1982, the U.S. labor department reported. (See “CORE INFLATION SETS ANOTHER 40-YEAR RECORD,” “ECB FEARS INFLATION WILL LAST FOR YEARS,” and “KEY INFLATION GAUGE COMES IN HIGHER THAN EXPECTED.”)
Millennials—already more socialistic in their politics—will turn up pressure for a more expansive social safety net and sharing of costs in education, health care, child care, and other areas.
Nayar noted that inflationary pressures in the U.S. are not expected to subside anytime soon and that “living paycheck to paycheck has become the norm.”
“Many are pessimistic about their odds of increasing their paycheck by switching jobs and some households will become more vulnerable to swings in labor market conditions. This could cause many to struggle with the upcoming Holiday season,” he said.
And in the upcoming 8 November U.S. mid-terms elections, “It’s the economy, stupid.” So despite the media pumping up the Roe vs. Wade narrative, Woke and other non-monetary issues, for those going to the polls, the bottom line is income survival.