LendingClub in association with PYMNTS, published the results of the 18th edition of “New Reality Check: The Paycheck-to-Paycheck Report”, the paycheck research series, which examines the expectations of American consumers for 2023 and how current inflation and economic uncertainty will affect your spending.
According to the results of the Personal Finance Study, 64% of US consumers (166 million) were living paycheck to paycheck in December 2022, up 3 percentage points from 61% the year before.
The greatest growth was observed in the highest income brackets. In fact, 9.3 million more consumers now live paycheck to paycheck, and 8 million, or 86%, of those consumers earn more than $100,000 a year.
“The effects of inflation are eating into the wallets of all Americans, and as the Fed’s efforts to curb inflation drive up the cost of debt, we are seeing a near-record number of Americans living paycheck to paycheck.” , commented Anuj Nayar, LendingClub’s financial health officer.
The report notes that in December 2022, 51% of consumers making more than $100,000 a year said they lived paycheck to paycheck, up 9 percentage points from 42% in December 2021.
By contrast, the proportions of middle-income consumers (those earning between $50,000 and $100,000 a year) and low-income consumers (those earning less than $50,000 a year) have remained relatively constant over the same period, standing at at 66% and 78%, respectively, by December 2022.
The report indicates that with inflationary pressures weighing on consumers’ wallets, many are likely to avoid large purchases in 2023. For example, only 35% of consumers said they will incur leisure travel expenses in 2023, and only 24% plan to buy expensive electronics or appliances this year.
“If consumers’ perception that their incomes will improve this year proves to be true, it will make it more difficult for the Fed to curb inflationary pressures,” Nayar added. “We can expect more and more Americans of all incomes to identify as living paycheck to paycheck until we see the economy pick up. Now more than ever, it’s crucial for consumers to examine their spending and build a cushion of savings to prepare for the unexpected. “
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