Consumers with annual salaries in excess of $100,000 are not gliding through the present economic difficulties. In fact, figures from December reveal that 16% of high-income customers are struggling to make ends meet, a 45% rise year over year.
Inflation has cut into consumer budgets across income and age categories, with the average American spending 22% of their income on basic necessities such as food, clothes, and housing. Certain items that most people deem vital, such as transportation or healthcare, are not included in this category.
Since salary increases continue to lag behind growing cost-of-living rises, the proportion of consumers living paycheck to paycheck was bound to include individuals in higher income levels. “New Reality Check: The Paycheck-to-Paycheck Report,” a recent partnership with LendingClub, reveals consumers’ financial lifestyles by income category.
While still the lowest number across categories, the fact that 16% of higher-earners are living paycheck to paycheck and having difficulty paying expenses is alarming. Translating those percentages into figures, 9.3 million more Americans were living paycheck to paycheck in December 2022 than the previous year.
Above $100,000 earners were the fastest-increasing cohort, with 8 million joining the ranks. It’s no surprise that higher-end supermarkets like Whole Foods have faced budget cuts.
The end of increased prices may take longer than expected, as the Federal Reserve indicates it will continue to boost interest rates in reaction to economic indications. This comes as no surprise to consumers, as more than half of those polled forecast increasing inflation and interest rates into 2023.
