More than 150 million American adults are living paycheck-to-paycheck amid soaring inflation, a poll from LendingClub and PYMNTS revealed earlier this month, a drastic increase from levels reported at the same time last year.
The survey of more than 4,000 Americans showed that “consumers in all income brackets — including those who make more than $100,000 annually” — are devoting nearly all of their salaries to paying their expenses, with little to nothing left over for savings.
In April 2021, when year-over-year consumer price inflation reached 4.2%, and the economy continued to rebound from the previous year’s recession, roughly 52% of consumers were living paycheck-to-paycheck, according to the survey. In April 2022, when consumer inflation was 8.3%, that figure rose to 61%.
“Inflation will most likely be part of the economic picture for many months to come, and consumers living paycheck to paycheck of all income brackets will need to review their financial situations and plan their spending accordingly,” the survey report concluded.
Nearly 80% of Americans earning less than $50,000 reported living paycheck-to-paycheck — 36% “with difficulty” and 44% remaining “comfortable.” Among Americans earning between $50,000 to $100,000, more than 63% said they were living paycheck-to-paycheck. Struggles with making monthly costs extended to higher income brackets, with 36% of those earning over $250,000 reporting the same tight financial lifestyle.
High inflation in the month of May was largely driven by soaring energy costs. The price of fuel oil rose 107% year-over-year, gasoline rose 49%, utility gas service rose 30%, and electricity rose 12%. Likewise, food prices continued to increase, with the cost of meat, poultry, and fish rising 14.2% year-over-year.
Rising price levels are a significant factor behind consumer sentiment plummeting to its lowest level in seven decades, according to the University of Michigan’s benchmark Survey of Consumers. Because the United States economy largely centers upon consumer spending, the economic pessimism could point toward a looming recession.
“Consumers across income, age, education, geographic region, political affiliation, stockholding and homeownership status all posted large declines,” Survey of Consumers Director Joanna Hsu said in a statement, per CNN. “About 79% of consumers expected bad times in the year ahead for business conditions, the highest since 2009.”
President Joe Biden has deflected on the issue of rising price levels, claiming that “Putin’s Price Hike” is the primary cause of skyrocketing inflation.
“High gas prices at the pump, energy, and food prices accounted for around half of the monthly price increases, and gas pump prices are up by $2 a gallon in many places since Russian troops began to threaten Ukraine,” Biden said. “Even as we continue our work to defend freedom in Ukraine, we must do more — and quickly — to get prices down here in the United States.”
President Biden also recently alleged that inflation is “worse everywhere but here.” Indeed, several other developed countries — including Germany, the United Kingdom, Canada, Italy, and South Korea — are enduring higher inflation than the United States, according to recent data from the Organization for Economic Cooperation and Development (OECD). The international organization recently hiked its inflation forecasts for the United States from 4.4% to 5.9% — a level exceeding expected rates for Australia, France, South Korea, Norway, Switzerland, and Japan.