Greater than half of Individuals incomes six-figure salaries admitted they have been residing paycheck to paycheck final yr as excessive inflation slammed households, in response to an alarming examine launched this week.
As of the top of December, 51% of Individuals with $100,000 or extra in annual revenue mentioned they lived paycheck to paycheck, in response to the survey performed by LendingClub and Pymnts.com. The share rose 9% in comparison with one yr earlier, when 42% of six-figure earners made the identical admission.
General, a whopping 64% of US customers — the equal of 166 million Individuals — mentioned they have been residing on razor-thin budgets every month. That was up from 61%, or about 9.3 million, in comparison with the earlier yr’s findings.
Of the 9.3 million Individuals who joined the ranks of month-to-month battle, 8 million earn greater than $100,000.
“The results of inflation are consuming into each American’s pockets and because the Fed’s efforts to curb inflation drive up the price of debt, we’re seeing near-record numbers of Individuals residing paycheck to paycheck,” mentioned Anuj Nayar, monetary well being officer at LendingClub.
“Whereas the variety of Individuals residing paycheck to paycheck is near the peak we noticed in the midst of the pandemic, the causes seem like very totally different, because the economic system just isn’t sheltering in place prefer it was again in 2020,” Nayar added.
Inflation has cooled barely in latest months, but it surely nonetheless stays a serious supply of strain on US households. General, costs rose 6.5% in December, whereas the price of groceries jumped practically 12%, in response to the Client Worth Index.
The providers index, which incorporates housing, transportation and medical care, rose 7% in comparison with final yr.
The share of Individuals who mentioned they have been having hassle overlaying their payments jumped to 24% in December, up 2% in comparison with the identical month one yr earlier, in response to the survey.
Inside the six-figure revenue bracket, 16% mentioned they have been struggling to pay their payments.
Regardless of some enhancements in inflation, many Individuals are nonetheless taking a pessimistic view of the economic system. Simply 4 out of 10 Individuals who admitted residing paycheck to paycheck anticipate their incomes to maintain tempo with inflation this yr.
Moreover, 90% mentioned their pay will increase have been successfully worn out by greater costs final yr.
“We will anticipate an increasing number of Individuals of all incomes figuring out themselves as residing paycheck to paycheck till we see the economic system get better,” Nayar added. “Now greater than ever, it’s essential for customers to look at spending and construct a cushion of financial savings to arrange for the sudden.”
The survey primarily based its findings on responses from practically 4,000 US adults between Dec. 8 and Dec. 22.
Final week, knowledge launched by the Commerce Division confirmed a decline in private spending in December — an indication that Individuals are reducing again on purchases because of the affect of inflation.
Individuals will likely be watching intently this week because the Federal Reserve makes its choice on one other rate of interest hike. Fed officers have signaled charge hikes will proceed till inflation is addressed — regardless of issues of a slowing economic system.