Nearly Two-Thirds of Americans Are Barely Making Ends Meet: Survey

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The number of Americans living paycheck to paycheck has increased over the last year, with more than half of consumers left with little money to spend at the end of the month, a new survey has found.

The survey, conducted by Pymnts and LendingClub, was published on Jan. 30 and is based on a survey of 3,989 U.S. consumers conducted from Dec. 8 to Dec. 23, as well as an analysis of other economic data.

It found that at the end of last year, around 64 percent of consumers said they were living paycheck to paycheck, marking 9.3 million more than the year before. That figure includes around 8 million consumers making more than $100,000 per year.

According to the Bureau of Labor Statistics, the average American earns $58,260 a year.

In addition, the study found that 27 percent of consumers believe their personal finances will get worse this year as prices continue to rise, while around one-third anticipate that their financial situation won’t significantly change.

However, four out of 10 consumers cut a more optimistic note and said they expect their personal finances to improve in the next year, up seven percentage points from 33 percent in July 2022.

Americans Concerned With Inflation, Uncertain About Economy

Those making more than $100,000 per year are the most likely group to believe that their financial situation will improve, the study found, although that share has dropped four percentage points since July 2022.

The majority of those surveyed cited inflation and economic uncertainty as reasoning for the pessimism this year, at 72 percent and 66 percent, respectively.

The survey comes as inflation—which eased slightly to 6.5 percent in December—continues to eat away at spending power among American households.

A separate report from the Department of Commerce published on Jan. 27 showed that household spending, which accounts for more than two-thirds of U.S. economic activity, dropped 0.2 percent in December.

Data for November were also revised lower to show spending declining 0.1 percent instead of gaining 0.1 percent as previously reported, as more and more Americans are forced to cut back on spending as prices continue to rise.

“Prospects for consumer spending are cloudy,” Lydia Boussour, senior economist at EY Parthenon, told Bloomberg. “Elevated prices, eroded personal savings, and increased reliance on credit point to weak consumer spending this winter. These dynamics will be exacerbated by negative wealth effects from lower stock prices and declining home values.”

Fed Officials Set to Raise Rates Again

However, the Commerce Department report showed that incomes grew too, albeit slowly, at 0.2 percent, and the personal savings rate also jumped to a seven-month high of 3.4 percent, a level not seen since last May 2022, suggesting that more Americans may be approaching this year with caution—and a safety net—amid economic volatility.

The Federal Reserve’s policy-making arm, the Federal Open Markets Committee (FOMC), which started raising borrowing costs in March 2022, has continued with raises each month and is widely expected to raise interest rates again by a quarter percentage point at its meeting on Jan. 31–Feb. 1, bringing it to a range of 4.50–4.75 percent.

In December, Fed officials had said they anticipated raising rates to just above 5 percent next year, which is higher than previously projected, but then holding rates at that level throughout the year in an effort to cool off inflation.

Yet with inflation easing only slightly in December, what the central bank decides to do at its next meeting remains to be seen.

“They’re going to stay vigilant on inflation—I don’t think they’re going to break out the ‘mission accomplished’ banner just yet,” Gennadiy Goldberg, a rates strategist at T.D. Securities, told The New York Times about the upcoming Fed meeting. “If they don’t send the signal that they really want to get inflation under control, the market could over-interpret that as a signal that they’re done. That’s not the message they want to send.”