More than half of Americans earning six-figure salaries admitted to living paycheck to paycheck last year as high inflation wiped out households, according to an alarming study released this week.
At the end of December, 51% of Americans with annual incomes of $100,000 or more said they were living paycheck to paycheck, according to the survey conducted by LendingClub and Pymnts.com. The stock was up 9% from a year earlier, when 42% of six-figure earners made the same admission.
Overall, a whopping 64% of US consumers – the equivalent of 166 million Americans – said they lived on a razor-thin budget every month. That was an increase of 61%, or about 9.3 million, compared to last year’s findings.
Of the 9.3 million Americans who joined the monthly struggle, 8 million earn more than $100,000.
“The effects of inflation are eating into every American’s pocketbook 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,” said Anuj Nayar, Financial Health Officer at LendingClub. .
“While the number of Americans living paycheck to paycheck is close to the highs we saw in the midst of the pandemic, the causes appear to be very different as the economy is out of place as it was in 2020,” Nayar added. .
Inflation has cooled somewhat in recent months, but remains a major source of pressure on US households. Overall, prices rose 6.5% in December, while the cost of groceries rose nearly 12%, according to the Consumer Price Index.
The services index, which includes housing, transport and medical care, rose 7% from last year.
The percentage of Americans who said they were struggling to pay their bills rose to 24% in December, up 2% from the same month a year earlier, according to the study.
Within the six-digit income bracket, 16% said they struggled to pay their bills.
Despite some improvements in inflation, many Americans still have a pessimistic view of the economy. Only four out of 10 Americans who admitted to living paycheck to paycheck expect their income to keep pace with inflation this year.
In addition, 90% said their pay increase last year was effectively canceled out by higher prices.
“We can expect more and more Americans of all incomes to self-identify as living wages until we see the economy recover,” Nayar added. “Now more than ever, it is crucial for consumers to examine their spending and build up a savings account to prepare for the unexpected.”
The study based its findings on responses from nearly 4,000 U.S. adults between Dec. 8 and Dec. 22.
Last week, data released by the Commerce Department showed a drop in personal spending in December — a sign that Americans are cutting back on purchases due to the impact of inflation.
Americans will be watching closely this week as the Federal Reserve makes its decision on another rate hike. Fed officials have indicated rate hikes will continue until inflation is addressed — despite concerns about a slowing economy.