Rising prices mean that Americans are spending more on the same goods and services, and as a result more than 60% of U.S. consumers are living paycheck-to-paycheck or dipping into savings to cover their routine costs, a recent LendingClub report found.
The number of Americans living paycheck-to-paycheck was up 5.5% in June from a year prior as fully 61% of Americans now devote nearly all of their salaries to expenses with little or nothing left over at the end of the month, according to LendingClub’s report. Americans’ purchasing power has declined in recent months as inflation has outpaced wage increases, making it more difficult to afford normal budgets, the report concluded.
“As inflation continues its upwards swing, consumers are finding it more difficult to manage spending and are eating into their savings as financial pressures mount,” Anuj Nayar, LendingClub’s financial health officer, said in a press release.
The number of consumers living paycheck to paycheck has increased year-over-year across all income levels.
The latest @pymnts X LendingClub Paycheck-to-Paycheck Report is live: https://t.co/IgIo8sDPIV#LendingClub #PYMNTS pic.twitter.com/OJdGmwb7p0
— LendingClub (@LendingClub) August 1, 2022
Increased financial pressure was by no means restricted to poorer households; in fact, the biggest rise in paycheck-to-paycheck consumers between May and June was for those earning between $100,000 and $150,000, up 11 percentage points to 52%, according to the press release.
As inflation rises, more and more Americans have to dip into savings, and as a result per capita savings dropped by $517 from $11,724 in May 2022 to $10,757 in June, the report found. (RELATED: Democrats Claim The ‘Inflation Reduction Act’ Won’t Raise Taxes. Here’s Why That’s Not True)
On July 13 the Department of Labor announced that consumer price index (CPI) inflation had climbed 9.1% over the 12 months ending in June, the highest year-over-year percentage increase since December 1981. On July 29 the personal consumption expenditures index (PCE), the Fed’s preferred metric, came in at 6.8% for June, also a decades-high rate.
LendingClub’s report was based on a census-balanced survey of 3,583 U.S. consumers and was conducted between June 8 and June 27.
The White House did not immediately respond to the Daily Caller News Foundation’s request for comment.
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