Personal finance

61% of Americans are living paycheck to paycheck — inflation is still squeezing budgets

Products You May Like

The battle against inflation is not over.

As of July, 61% of adults still said they are living paycheck to paycheck, according to a new LendingClub report, slightly more than last year’s 59%.

Yet, recent releases show that, at least compared with the soaring inflation of a year ago, consumers who have been squeezed by higher prices should be experiencing some relief. June and July both saw easing in the pace of price increases, with core inflation up 0.2% for each month, according to the U.S. Bureau of Labor Statistics.

More from Personal Finance:
81% of full-time workers want a 4-day work week
How much people really tip post pandemic
Why Americans are struggling with car loans

Inflation ‘remains too high’

But in recent remarks, Federal Reserve Chair Jerome Powell said inflation “remains too high” despite those positive indicators, and warned that more interest rate hikes are still possible.

Central bank officials have already raised rates 11 times, pushing the Fed’s key interest rate to a target range of 5.25% to 5.5%, the highest level in more than 22 years. 

Already, four out of five consumers’ spending habits have been affected by inflation, according to TD Bank’s annual consumer spending index.

“Consumers are undoubtedly continuing to feel the impact of inflation and rising interest rates,” said Chris Fred, TD Bank’s head of credit cards and unsecured lending.

Lower-income workers have been the hardest hit by higher prices, particularly for food and other necessities, since those expenses account for a bigger share of the budget, studies show.

Now, 78% of consumers earning less than $50,000 a year and 65% of those earning between $50,000 and $100,000 were living paycheck to paycheck in July, both up from a year ago, LendingClub found. Of those earning $100,000 or more, only 44% reported living paycheck to paycheck. 

Financial stress all around

Some 70% of Americans admit to being stressed about finances, according to a separate CNBC Your Money Financial Confidence Survey conducted in March, largely due to inflation, rising interest rates and a lack of savings.

Only 45% of adults said they have an emergency fund. For those who do have emergency savings, about 26% polled said they have less than $5,000 saved.

That survey found that 58% of Americans are living paycheck to paycheck.

Subscribe to CNBC on YouTube.

Products You May Like

Articles You May Like

Chinese electric car company Nio to enter Middle East this year amid global expansion by peers
Family offices are planning big investments in private companies
Biden and Trump both want to extend tax cuts for most Americans — but paying for it could be tricky
Top Wall Street analysts are optimistic on the outlook for these 3 stocks
Synapse bankruptcy trustee says $85 million of customer savings is missing in fintech meltdown

Leave a Reply

Your email address will not be published. Required fields are marked *