Nearly two out of every three adults in the U.S. are just scraping by, due to inflationary pressures, according to a new study.
Research from LendingClub finds that 61% of adults were living paycheck to paycheck as of July 2023, a two-point increase from the previous year. That comes even as inflation rates have dropped from 9.1% last July to 3.2% this year.
So what’s driving the financial crunch? It’s a variety of factors, but spending habits are a notable part. Some 21% of the people who are in the paycheck-to-paycheck situation say nonessential spending is to blame. And two-thirds of consumers in that precarious situation say they include nice-to-have items when shopping at least some of the time. 10% of all paycheck-to-paycheck consumers — or 16 million U.S. consumers—cited nonessential spending as the top reason they are in that situation.
Meanwhile, 36% of Generation Z respondents described their spending as “indulgent” for at least three product or service categories.
“Consumers, despite financial challenges and tighter budgets, indulge in nonessential spending when possible,” the report reads.
The breakdown of people living paycheck to paycheck was fairly evenly spread. Low-income consumers—those earning less than $50,000 annually—saw the biggest increases, rising from 74% in July 2022 to 78% in July 2023.
Consumers earning between $50,000 to $100,000 annually saw a 2% year-over-year jump to 65%. And among people earning over $100,000 per year, 43% say they’re now living paycheck to paycheck, a 1% rise in the past year.
The news of the tenuous financial state of so many Americans follows a report in January that 57% of the country couldn’t afford a $1,000 emergency. A separate survey from the Federal Reserve found that nearly four in 10 Americans didn’t have enough money to cover a $400 emergency expense.
