(RepublicanJournal.org) – PYMNTS, in coordination with Lending Club, recently conducted a survey on household spending, and their analysis indicates that roughly 60% of Americans are living paycheck to paycheck. The figures include up to 45% of high-income earners, or people making $100,000 or more annually. The survey included 4,218 US consumers and was conducted between August 2 and August 15.
Inflation has dropped dramatically over the last year — from 9.1% in July 2022 down to 3.7% in August 2023 — but consumers are still struggling to make ends meet. One in five will need to rely on credit cards this year to get through the holiday season, which will put an additional strain on as many as 28% of people who aren’t suffering persistent financial hardship. Nearly half of all Americans report struggling finances around the holidays.
Spending drives the economy, according to The Wall Street Journal, which states that consumer purchases account for about 70% of the money in circulation. High prices have led to Americans focusing more on needs than wants, a shift that has become more prominent as savings accounts dwindle and credit card interest rates keep rising. And with most people having balances that are about 15% higher than their norms, the interest could be crippling to many families. Additionally, mortgage rates have skyrocketed, leaving up to 57% of homebuyers worried about how they’ll continue to meet their payments.
Less spending means higher risks of a future recession, and with consumer confidence at a staggering low, trends aren’t likely to change soon. Grocery and gasoline prices are two major contributing factors, forcing most households to tighten their belts just to afford the bare necessities. Meanwhile, The New York Times reports that discount stores like Walmart, Dollar Tree, T.J. Maxx, and Marshalls have reported rises in sales — a sign that Americans still have little to spend and are continuing to cut corners wherever they can.
Economists still aren’t sure how likely a recession is, but as families gear up for the holidays, the next few months should be telling.
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