Two-thirds of Americans live paycheck to paycheck
Among them there are those with six-figure incomes
Fewer Americans are able to save money from their monthly budgets as prices continue to rise, outpacing wage increases, reports CNBC.
As of September, 63 percent of Americans were living paycheck to paycheck, according to a recent LendingClub report, which is close to the all-time high of 64 percent reported in March. Last year, the number of people who felt pressured by financial difficulties was about 57 percent.
“Consumers are unable to cope with galloping inflation,” said Anuj Nayar, a financial health specialist at LendingClub. “Having a job is no longer enough for the average American,” he added. According to him, the wage increase is not enough and many consumers are left with very little or no funds after paying the monthly expenses. According to him, inflation has led to a permanent decline in real wages.
The consumer price index, which measures the average change in the prices of consumer goods and services, rose 8.2 percent on an annual basis and is still hovering around the highest levels of the early 1980s.
Real average hourly earnings fell 0.1 percent on a monthly basis and 3 percent on a year-over-year basis, according to the Bureau of Labor Statistics.
A separate report by Salary Finance indicated that two-thirds of working-age Americans said they were worse off financially than a year ago.
Even the finances of people with high incomes have deteriorated, LendingClub notes. Of those earning six figures, 49 percent said they were living paycheck to paycheck, up from 38 percent last year.
As a result, many Americans have turned to their savings or to borrowing.
At this rate, financial distress could reach an all-time high by the end of 2022, according to Nayar. With inflationary pressures not expected to ease, living paycheck to paycheck is about to become the norm, he said.
The US Federal Reserve raised its key interest rate by 0.75 percentage points last month for the third time in a row to calm galloping inflation. The central bank hinted that more hikes could be expected until inflation shows signs of easing.
