Wednesday, August 10, 2022

Nearly two-thirds of Americans live paycheck to paycheck as inflation rises: Study

Pennies
United States one dollar bills are rotated and inspected during production at the Bureau of Engraving and Printing in Washington, DC, November 14, 2014. ,

A new report from PYMNTS and LendingClub shows that nearly two-thirds of American consumers, some 33% of whom make more than $250,000 a year, are living paycheck to paycheck, as inflationary pressures loom over the worldwide economic crisis. is ending.

The study, “New Reality Check: The Paycheck-to-Paycheck Report,” is based on an analysis of a survey of 4,048 American consumers conducted from April 6 to April 13, as well as other economic data.

“The US government’s April 2022 Consumer Price Index report finds inflation rose 8.3% over the past 12 months, with energy and food prices rising the most. And while costs are rising everywhere, more pandemics nationwide. related restrictions, which means it may be harder than ever to live in and save money,” noted the researchers behind the report.

“We find that consumers of all income groups – including those who make more than $100,000 a year – survive paycheck to paycheck. PYMNTS research finds that 61% of US consumers paycheck to April 2022 living up to paycheck, representing a 9 percent increase from 52% in April 2021, meaning three out of five American consumers devote nearly all of their wages to spending, some at the end of the month Not even left.”

The researchers noted that because only one in three consumers earning $250,000 or more annually, those who currently live paycheck to paycheck, are typically associated with higher credit scores, they may be less likely to spend money on credit cards and other financial services. are able to better manage their cash flow through the products.

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“Consumers in the lowest bracket are 40% more likely to use financial products than those earning more than $250,000 and 63% of them have a higher than average credit score, exceeding 750 points,” the researchers said. ” “Like many paycheck-to-paycheck consumers, they remain creditworthy and have above average credit scores and are apt to tap into other payment options such as credit cards and personal loans to manage their cash flow. “

The researchers cautioned that since inflation will likely occur in the near future, consumers will need to revise their spending patterns.

They concluded, “Inflation will be part of the economic picture for many months to come, and consumers living paychecks of all income groups will need to review their financial conditions and plan their spending accordingly.”

Speaking on a panel with the heads of the European Central Bank and the Bank of England on Wednesday, Federal Reserve Chairman Jerome H. Powell said he is not yet sure whether pre-pandemic global conditions that kept price growth slow and steady will return.

According to The New York Times, Powell said, “We have gone through a period of deflationary forces around the world.” “Since the pandemic, we’ve been living in a world where the economy is being driven by very different forces, and we know that. What we don’t know is whether we’re going to go back to something that Which looks more, or a little bit like what we had before.”

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European Central Bank President Christine Lagarde said inflation in the eurozone was “undesirably high”. She doesn’t believe that “we’re going back to the environment” that kept prices low over the past two decades.

Inflation across the eurozone exceeded 8% in May, well above the Central Bank’s target of 2%. In Spain, the annual inflation rate exceeded 10% for the first time since 1985.

Lagarde said, “There are forces that have emerged as a result of this major geopolitical setback as a result of the pandemic that we are facing now … in the context of the war in Ukraine.

Researchers have said that African Americans who lag behind their white counterparts in income, wealth, financial savings and home ownership may face the most damaging effects as inflation continues to rise, Nation World News reported.

“It’s going to be extremely devastating,” William Darrity Jr., professor of public policy, African American studies and economics at Duke University, told the news network. “People will have to make very, very difficult decisions about whether to buy medicine, buy food or skip paying for their utilities. It will have a drastic impact on people’s well-being.”

Elementary schoolteacher Krista Johnson, 33, who is pregnant and set to give birth in August, told Nation World News that she remains worried, even though she is packing her husband’s lunches, eating less and he She is doing what she can.

“I’m just concerned about quality of life,” Johnson said. “You already have panics about being a new parent. And then you probably have a whole economic downturn coming your way and that can create some anxiety.”

Nation World News Desk
Nation World News Deskhttps://nationworldnews.com
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