More than half of high-income Americans become the 'working poor'
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To tackle the situation, the Federal Reserve maintains its stance on increasing interest rates to fight inflation, and citizens expect even higher rates this year.
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Customers standing outside a Costco Wholesale branch. (Reuters)
The economic crisis and inflation in the US have taken a grave toll on Americans that 9.3 million more consumers at the end of 2022 were living paycheck to paycheck, although, eight million of them earn more than $100,000 annually and still find it difficult to save money.
To tackle the situation, the Federal Reserve maintains its stance on increasing interest rates to fight inflation, and citizens expect even higher rates this year. Even if wages do increase to keep up, prices will increase.
Read next: Half of American workers want to quit their jobs in 2023
In a report titled: “New Reality Check: The Paycheck-To-Paycheck Report,” part of a PYMNTS and LendingClub collaboration, consumer expectations for this year, 2023, are measured alongside the impact that inflation and economic uncertainty will have on their spending habits.
The data is derived from a survey of 3,989 US consumers carried out from December 8 to 23, 2022.
Light at the end of the tunnel
The report found that 4 out of 10 of the surveyed (which are those who earn more than $100,000) anticipate an improvement in their personal finance which jumped seven percentage points from 33% in July 2022, as opposed to one-third seeing no significant change and 27% see the situation worsening.
Those who live from one salary to the other, amounting to 42%, consider job promotions and additional income as factors behind their positive outlook on wage increases. On the other hand, 40% who struggle to pay their bills expect likewise.
30% of those not living paycheck to paycheck look forward to an improved financial situation this year.
Individuals living on a salary basis not only identify inflation as the reason behind their negative outlook but also believe their financial situation will hit rock bottom this year, amounting to 27%.
72% point to inflation, and 66% see economic uncertainty as a reason why they have a negative outlook.
Among paycheck-to-paycheck consumers who think their financial situation will worsen next year, about three-quarters cite inflation as a reason for their pessimism, while two-thirds blame economic uncertainty.
Consumers not living paycheck to paycheck are more worried about economic uncertainty than inflation, at 72% versus 62%, respectively.
That comes after reports in November stated that inflation in the US surged even higher and retirement benefits no longer offer retired individuals their needs for a decent living.
