Four in 10 Americans earning more than $100,000 live paycheck to paycheck, a new report finds, citing inflation and excessive spending both to blame.
Those earning less are significantly more likely to say they live paycheck to paycheck, with no money left to save at the end of the month.
Eight out of 10 of those earning $50,000 or less a year say they fall into this category.
Nationally, 61 percent of Americans live paycheck to paycheck, according to a new report from LendingClub, cited by CBS News.
The figure represents an increase of 2 percent year-on-year.
Across America, 61 percent of people say they live paycheck to paycheck, with no money left to save at the end of the month
LendingClub found that one in 10 said non-essential expenses were the reason they didn’t have money to save at the end of the month.
“21 percent of paycheck-to-pay consumers say non-essential expenses are one reason for their financial lifestyle, while 10% say it is the number one reason for living paycheck-to-pay,” the report said.
“This factor is significant: consumers, despite financial challenges and tighter budgets, spend money on non-essential expenses whenever possible.”
Non-essential expenses include clothing, makeup, vacations, consumer goods, and entertainment.
But households also felt the pressure from essential spending.
The median monthly salary for a U.S. worker, pre-tax, is $4,766, according to the Bureau of Labor Statistics. That’s an annual salary of $57,000.
Of that $4,766, the average American will spend $3,550 on essentials.
The average one-bedroom apartment will cost $1,510 a month to rent, while the average American will spend $690 on food, including groceries and eating out.
Travel, including car, gas and public transportation costs the average American $900, and health care costs average $450 per month.
New data released Thursday showed that the Federal Reserve’s preferred measure of inflation saw an increase last month, a sign that the central bank’s battle against price increases is not over.
Excluding food and energy prices, the price index for personal consumption expenditure rose 4.2 percent in July, compared to 4.1 percent in June, the Commerce Department reported.
The so-called core PCE figure is the figure that Fed policymakers are targeting for their annual inflation target of 2 percent. In February 2022, a peak of 5.4 percent over a period of 40 years was reached.
Last month’s increase was fueled by rising prices for services, including housing and health care, while overall commodity prices actually fell from a year ago, led by declines in the cost of furniture and recreational goods.
The new inflation numbers were in line with expectations, raising hopes that the Federal Reserve could pause its aggressive rate hikes at its next meeting in September.
Excluding food and energy prices, the price index for personal consumption expenditure rose 4.2 percent in July, compared to 4.1 percent in June
“The data suggests that inflation progression will reverse, although our estimates suggest price pressures will ease over the remainder of the year,” High Frequency Economics chief economist Rubeela Farooqi wrote in a letter to clients.
The PCE measure for all items, including food and energy, rose 3.3 percent year-on-year last month, compared to 3 percent the month before.
The services sector recorded an annual increase of 5.2 percent – in stark contrast to the price of goods, which fell by 0.5 percent.
According to the CME Group’s FedWatch tool, financial markets are still pricing an 88.5 percent change in the Fed leaving its benchmark overnight interest rate unchanged.
The S&P 500 and the Dow Jones were expected to open higher following the latest inflation data, while the Nasdaq composite pointed slightly lower.
Month over month, the PCE and core PCE both rose 0.2 percent, the same monthly increase they both posted in June.
The latest data follows other recent reports suggesting that the economy and the labor market are slowing enough to cool inflationary pressures.
The inflation gauge released on Thursday is separate from the better-known consumer price index, which can be seen above
For example, the number of advertised job openings fell in July, and fewer Americans are quitting their jobs to seek better opportunities.
Both trends ease the pressure on companies to raise wages to find and keep workers – a move that tends to perpetuate inflation as employers raise prices to offset higher labor costs.
The inflation meter that was issued on Thursday is separate from the better-known consumer price index.
Earlier this month, the government reported that CPI rose 3.2 percent in July from a year earlier, after peaking at 9.1 percent in June 2022.