Millions More Americans Living Paycheck-to-Paycheck: How They’ll Cut Spending Back Amid 2023 Inflation
Times have been tough amid inflation, which was up 9.1% in June 2022 — the largest year-over-year increase since the 12-month period ending Nov. 1981, according to the U.S Bureau of Labor Statistics. Thanks to the drastic rise in prices, more consumers have been having a difficult time making ends meet. A new LendingClub survey found that 64% percent of U.S. consumers were living paycheck-to-paycheck in Dec. 2022, up 3 percentage points from 61% the year prior.
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The survey found that 9.3 million more consumers are now living paycheck-to-paycheck than in 2021, and 8 million, or 86%, of those consumers earn more than $100,000 annually. The survey also showed that a growing number of consumers earning more than $100,000 are living paycheck-to-paycheck and struggling to pay their monthly bills; in December 2022, 16% of these higher earners struggled to pay their monthly bills, up from 11% in Dec. 2021. Meanwhile, 66% of respondents making between $50,000 and $100,000 a year said they are living paycheck-to-paycheck — and a full 78% of those polled who make less than $50,000 per year said the same.
“The effects of inflation are eating into every American’s wallet and as the Fed’s efforts to curb inflation drive up the cost of debt, we are seeing near record numbers 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 height we saw in the middle of the pandemic, the causes appear to be very different, as the economy is not sheltering in place like it was back in 2020.”
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To help curb the effects of inflation and make their paychecks go further, consumers are taking matters into their own hands and cutting spending in 2023. The LendingClub survey indicated that consumers will focus on saving in a few key areas, including:
- Electronics: The LendingClub survey found that just 24% of consumers plan to purchase electronics in 2023.
- Appliances: Consumers will also shy away from big buys like appliances, with just 24% saying they will buy those this year.
- Leisure travel: Leisure travel is off the table for many Americans looking to save amid inflation this year. According to the LendingClub survey, just 35% of Americans will spend on this category in 2023.
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