A growing number of Americans are struggling to pay their bills. subject to inflation and the loss of federal pandemic aid.
About 36% of consumers say it was “somewhat” “very difficult” to pay their regular bills in the past seven days, according to the Census Bureau’s Household Pulse Survey, which collected responses in the first two weeks. February. That represents a 25% increase from a year ago, and even in the early months of the pandemic, households are on top of extended unemployment benefits and stimulus checks.
The health of the American consumer is key to the US economy, with consumer spending accounting for 70 cents of every $1 in economic activity. However, with food prices rising 20% in two years and rents rising 13%, there are signs households are reaching breaking point.
Consumers are cutting back by shopping for cheaper store brands and even buying less food, GlobalData managing director Neil Saunders said in a research note citing his company’s survey of nearly 2,800 Americans.
“[I]”Inflation is not an enemy that consumers can endure indefinitely,” he said.
At the same time, there is a dichotomy in the economy: As long as employers continue to hire, the labor market remains strong. Even though more Americans may have jobs than in the early days of the pandemic, their incomes are not keeping up with inflation — reducing their standard of living, experts say.
“The real yield has been negative every month since April 2021,” said Evan Lorenz, Grant’s deputy editor of the Interest Rate Monitor. “They spend less money bringing home each week.”
Census data shows that some Americans are struggling more than others, with many southern states reporting most of the hardship. Incomes are generally lower in these areas, with many workers still earning the federal minimum wage of $7.25 an hour — an hourly rate that has not changed since 2009.
Mississippi has the highest share of Americans struggling to pay their bills — more than half of its residents have trouble meeting their regular obligations, according to census data. Other states with a higher than average share of struggling households include Alabama, Louisiana and West Virginia.
The median household income in Mississippi is $46,637, well below the U.S. median of $70,784, according to the Federal Reserve Bank of St. Louis. Meanwhile, Minnesota, the state with the lowest share of residents struggling to pay their bills, has a median household income of $80,441.
According to a study released last month by LendingTree, the share of Americans living paycheck to paycheck is on the rise. The analysis shows that 61% of consumers will be living paycheck to paycheck in December, up seven percentage points from May 2021.
“I’m so surprised”
Not surprisingly, Americans making less than $25,000 are struggling the most, with about 64% saying they’ve recently had trouble paying their last bill, according to the Census report. Food stamp recipients, who typically live in low-income households, report financial hardship, according to Stacey Taylor, director of policy and partnerships at Propel, which makes a balance-checking app for food stamp recipients. .
Food stamp recipients report issues such as, “My credit cards are maxed out, I can’t find the right job, my rent is past due, and I’m at the breaking point,” Taylor said in the company’s February survey. number of its users.
He added: “All we heard was, ‘I’m so shocked.’
Even some high-income Americans say they are struggling. According to the Census, nearly 1 in 10 people making more than $200,000 a year said they had some or a lot of trouble paying bills.
Of course, this represents a much smaller share than for low-income Americans, but it may indicate that even wealthier households are struggling to keep up with recent economic trends. For example, new cars are 19% more expensive than they were two years ago, and a record proportion of Americans are making monthly car payments. Over $1,000.
“The cost of living in America — you need a roof and a car to get to your job — is rising much faster than your income,” Lorenz said.