More consumers of all income brackets reported living paycheck to paycheck in July 2023 than last year. Spending shows why.
Personal Current Transfer payments (PCTR) primarily includes Social Security, Medicare, Medicaid, and Food Stamps.
New Reality Check: Paycheck-To-Paycheck
Please consider the LendingClub New Reality Check: Paycheck-To-Paycheck report for July 2023.
Key Points
- In July 2023, 61% of U.S. consumers lived paycheck to paycheck, unchanged from June 2023, but 2 percentage points higher than July 2022.
- The number struggling to meet bill payments remains at 21% since June 2023, which represents an increase of 2 percentage points from a year ago but is consistent with the 2021 and 2020 data.
- More consumers of all income brackets reported living paycheck to paycheck in July 2023 than last year. The data indicates the persistent financial challenges and inflationary pressures a significant portion of the U.S. population faces.
- 16 million U.S. consumers claim that nonessential spending is the primary reason they are trapped in the paycheck-to-paycheck cycle.
- Twenty-one percent of paycheck-to-paycheck consumers cite nonessential spending as one reason — but not the top reason — for their financial lifestyle.
Nonessential Spending
A notable 29% of Gen Z consumers living paycheck to paycheck cite nonessential spending as one of the factors contributing to their financial distress, with 15% citing it as the top factor, marking them the most affected demographic. In contrast, only 12% of baby boomers and seniors in similar financial situations attribute nonessential spending as a factor for their struggles. The likelihood of citing nonessential spending as a reason for living paycheck to paycheck decreases with age, making younger consumers more vulnerable to its adverse effects. The study also finds that male consumers are slightly more likely than female consumers to attribute their financial strain to nonessential spending.
Shoppers who say they engage in indulgent spending are also more likely to say they made payments related to credit cards, personal loans and buy now, pay later plans in the 30 days prior to the survey. Overall, credit product usage is 11 percentage points higher for consumers who cite indulgent spending than those who do not cite such spending. Higher credit usage among indulgent spenders suggests that credit usage on nonessential categories, such as clothing or travel, is more common than on essentials, such as groceries or household supplies.
April CNBC Report Shows 58 Percent Live Paycheck to Paycheck
Also consider the CNBC|Momentive Your Money Financial Confidence Survey.
- Just 13% of Americans say they are confident in America’s banking system according to a new poll from CNBC and Momentive fielded in the weeks after the collapse of Silicon Valley Bank.
- Seven in 10 people say they are stressed about their personal finances, and about half say their overall financial stress has increased since before the COVID-19 pandemic began.
- More than half of Americans (58%) describe themselves as living paycheck to paycheck, including a third of people with household incomes in the six figures.
- On top of all this, most Americans do not have an emergency fund to help buffer them in times of financial stress; among those who do, 40% say that have less than $10,000 saved for a time of need.
Personal Consumption Expenditures
The above chart shows nominal numbers. Inflation-adjusted, spending rose 0.6 percent in July and 0.4 percent in June as the lead chart shows. Spending is much higher than income.
Consumers Go on a Spending Spree in July, but Income Doesn’t Match
Consumers has gone on a huge spending spree in the last two months.
For more details, please see Consumers Go on a Spending Spree in July, but Income Doesn’t Match
In response, a reader commented “I think the consumer is much more robust than most of these comments suggest. Especially millennials. Their incomes are way up, they’re spending & they’re savings are up. All is well.“
What a hoot
By the way, if 61 percent live paycheck to paycheck but only 21 percent struggle, the rest are one unexpected expense or loss of income away from somewhere between struggling and outright disaster.
Jobs Rise by 187,000 But 110,000 Negative Revisions and Unemployment Soars by 514,000
Earlier today I noted Jobs Rise by 187,000 But 110,000 Negative Revisions and Unemployment Soars by 514,000
Any guesses why 736,000 people entered the labor force looking for jobs?
Everyone lives paycheck to paycheck.
Even the bond coupon clippers.
A better article would be:
“61% of Consumers Spend Their Entire Paycheck Within 30 Days”
Living pay check to pay check is nothing new. And maybe one should copy the headline of what you are linking to?
“29% of Gen Z Consumers Living Paycheck to Paycheck Cite Nonessential Spending as a Cause for Financial Distress”
@Solon, and Mish, combine this article on 61 percent of workers, with the Bank picture i dug up:
• For the top 50 US banks, deposits are only 60% of their total Assets. (The rest 40% is inter-bank bloat like bank to bank lending, FHLB slush galore etc.)
• For the top 30 US banks which have data as of 4Q22, Assets were ~$22 Trillion, Deposits were 50.35% of the assets ~$11.266 Trillion;
• For the top 30 banks which have data, within the category of deposits ALONE, the sum of deposits in accounts denominated LESS THAN $250K (erstwhile FDIC insurance limit) amount to only ~$3.62 Trillion. That is 32% of deposits.
• Takeaway: in our “macro economy”, the Mom and Pop pedestrian balances (<$250K, mind u, the average American has a FAR LOWER balance! FAR LOWER than 250K!), the pedestrian Mom/Pop balances account for ONLY 18% of bank assets: (60% deposit-to-asset ratio x 32% pedestrian-deposit-to-total-deposit ratio).
Just imagine what they think of "people". And yet Macroeconomics throws around ugly analyses as if all bank assets are "the people's money". LOL. It's ugly.
When I was younger I spent a lot of my money on whiskey and women.
Unfortunately I wasted the rest.
George Best just called…
“61 Percent of US Workers Live Paycheck to Paycheck, 21 Percent Struggle With Bills”
Uhh? OK!
Isn’t that about par for he course, for a third world country?
The only outlier, is that “we” are perhaps the only such country which looks at those numbers; yet still turn around and claim Chinese people are somehow doing their, like, “economics”, like, wrong and stuff; by saving a few pennies… Krugman may even chime in and accuse the remaining 39% of “hoarding”, and “contributing to a savings glut.”
Oh, life in Idiotopia during the #DumbAge…….
I don’t always have time to read all of Mish’s articles, and even less time to read the comments. However, when I do, I tend to laugh my *ss off.
People complaining about the government, businesses, unions, capitalism, etc etc and how it is all a big conspiracy to keep them down and control them.
What a bunch of crybabies. No wonder they are so jealous of the people who are successful.
We live in one of the best countries in the world, with opportunities for everyone who gives a crap about getting ahead.
The fact that they are complaining, tells me that they don’t have a clue about how to be a success in America today.
Another clue, is that when I post some investment recommendations here, I often get 5-10 thumbs down responses, and countless criticisms of why what I am saying will never work.
Too many folks here clearly do not want to do what is necessary to become wealthy. Better to criticize and complain about those who do become wealthy.
That’s why I miss the IGNORE button. Then I don’t have to even see their constant whining.
Lotta energy spent just to be rude. How’s your glandular health?
Get some love in your heart!
Its what I do when I have time. The rest of the time, I’m busy. Health, family, friends, wealth. In that order.
But I don’t come here to discuss my first 3 priorities.
I come here to get economic info and investment ideas. If you don’t have any of those, then you are of no use to me. Like so many of the useless idiots here.
Nah. I just like to complain about the almost maniacal egotists incessantly bragging about how rich they are becoming buying up the Canadian oil patch. If they were sincerely trying to be helpful they would simply present a table of trading symbols, percentage gain and dividend. But there’s very little ego boost in doing that.
Whenever I see and read articles like this, one question always comes to mind.
What would that 61% reportedly “living paycheck to paycheck” financially really be, if you truthfully laid out the numbers as they actually exist.
For some examples that if removed and that money was placed into actual living values like Roof, Food, Transportation etc. Say the person is a smoker, well that isn’t “Living” so to speak, but a want and not a need, so that expense must be removed from the equation. There is also a replacement of funds into the equation, so we now add back into the “Living Expenses” and they just increased by $1,825.00 per year ($5 Pack, Per Day).
Now remove and add back into the equation the following:
1. Alcohol
2. Going out to eat
3. Cell Phone (get a track type)
4. Junk Food
5. Cigarettes
6. Gas (drive less often by combining errands, wear sweatshirts, Blankets, etc)
The list is endless for some, while very small and therefore insignificant, but going through the exercise may surprise you more than you think, once it’s all added up.
Full Disclosure:
I am an ex-smoker & an ex-drinker, and cut out junk food and as result got off of 2 medicines, ironically also saving me money and increasing my health all at the same time. I am no longer stressed out about money, and I don’t have anymore than I do, but spend it much more wisely now…
Stu you make some good points and that gluttony applies to perhaps 10% of society. Also the Luxury crowd has been called out for over indulgence which probably accounts for another 10%. That still leaves 41% of the people who are still not making ends meet. To be fair lets add another 10% who are not gainful at all and just get by on government handouts whether needed on not. ( Social security is not a government handout) We are now talking about 31% of the population who are hard working, that are enduring the stress of honestly living paycheck to paycheck.
Many parts of the country are not opportunity zones and many are economically incestuous because the local economies are locked up by a few families or a few enterprises.
Not sure what the solution is or how to get there, but awareness is a good first step. Hardworking people with insufficient income to overcome currency debasement, and speculative movements of capital are not the problem.
I know of a guy who always preached “work smart” and in many ways he did well for himself. The thing I noticed after a while was that he didn’t work smart. What I noticed is that he didn’t work much at all. Everything he did was a gimmick or angle on something that benefited himself at other peoples expense. By outward appearances these people are lauded as being successful. Pull away the curtain and things are seen quite differently.
Well stated Chris, and I enjoy your obvious effort into detail. I have the gluttony crowd at 15%-20%, and the luxury crowd at 25%-30%. Both of these unfortunately, are cursed by the alcohol and going out. Different reasons mind you, but same end result’s financially.
I may not have represented the non economic area crowd as high as I do now after reading your reply.
Then there are … economically incestuous because the national economy is locked up by a few families and a few enterprises.
The localities of Washington, DC and 50 State houses come to mind.
When I was much younger I was fortunately taught:
Want what you need, not need what you want.
Makes for a much happier life.
Your individualist fantasy and the means for propagating it — from the language in your lungs, to the QWERTY keyboard & internet connection — has been afforded you by all the collective human genius that came before you got around to being. Enjoy the view from the shoulders upon which you and all of us perch, you rugged individual you!
Most posters here are middle to upper income (some are self described multi- millionaires) and out of touch with what it’s like to struggle.
Median home price is now $420K. Average wage $34. The math doesn’t add up.
A lot of people are living in housing that is below market rate. Whether that’s a house bought 10 years ago or an apartment where the rent hasn’t been meaningfully raised in years. Reality will bite if you ever have to move (unless it’s to a lower cost of living area).
I agree that many posters here are out of touch because of their wealth or income status.
I can see it in their comments about how little some of them value labor, or humanity in general. It all revolves around money or how their station in life is perceived to be superior to others. They would sell their soul, their country, and even their mother to achieve their material goals.
I see the next recession as a Divine recession, where productive people will do better and find a place. Paper Pushers, Money Movers, Economic Human Traffickers, Blowhards and those whose self preservation is achieved at other peoples expense; will be wondering what the heck happened to their carefree, freeloading sure thing.
People will no longer mesmerized by the charade.
Your comments are manna to would-be Communist demagogues, who will gladly use your angst and sense of Divine retribution to otherise and overthrow the bloated wealthy middle aged and retiree classes to grant you a short-cut.
The trouble with all this is that, as the Cultural Revolution, and French Revolution showed, if you are in the first wave of revolutionaries, you can be similarly upended and devoured by the second wave, who resent your gains at their expense.
Collectivism in all it’s forms is dangerous; individualist crime is far better than state orchestrated crime, if one has to choose; but of course, the weak are strong in a herd; and are incapable of becoming solitary predators, hence they prefer collectivist agitation to take down the solitary predators, like (the unlikely) ants attacking a tiger; or (unlikely) piranhas devouring an orca.
Not to say that creative destruction isn’t a healthy thing for the ecosystem, just beware of becoming collateral damage in your cause: smashing the icecream truck and factory may not get you any ice cream to enjoy in the heat that follows.
There is nothing controversial about those who produce doing better than those who slack. Most of the music comes from the violins and cellos. Have fun at a concert with only a guy waving a stick.
You mean one of the percussionists? Right?
There are people making well over 6 digits living paycheck to paycheck…meh. It is a lifestyle choice for many. When I was making next to nothing I had no debt, never ate out. I had more disposable income than people I knew making a lot more. I don’t buy into this nonsense. Look around. Lots of fat people living “paycheck to paycheck” driving nice cars and taking vacations.
We can ALWAYS assumed that Econ Numbers out of Government are politicized and thus LIES.
1) The bootstrap Bidenomic : cut nonessential spending.
2) The banks make money on the spread. Size doesn’t matter.
3) In the flyover area young people can save 60K out of 65K total wealth in a short time. Middle age people : 700K out of 750K total wealth. Frugal retirees might save 1.7M out of 2M total wealth. US consumers saved 700B out of 120T wealth.
In recession both will shrink. Cash is a king.
4) Consumers are spending because tomorrow prices will be higher. In a moderate deflation tomorrow prices will be lower. Real income might rise without a raise.
It is absolutely essential to have the latest cell phone, three streaming services, a new car every 3 years, and eating out several times a month.
Just the way our parents did.
3 times a month? How about 3 times a day? Thank you.
Is this really different than historical averages? That’s apparently a very difficult answer to find. I found one source that said is was 43% in 2007, 49% in 2008, 61% in 2009, and 77% in 2010.
Spending for cruises, travel, sporting events, concerts, etc, etc do not support the macro statement of paycheck to paycheck living
The rich are isolating themselves from ordinary society where things are paycheck to paycheck: expect to see them living in orbital space stations as soon as the things get built where they will truly “live in the clouds.”
https://en.wikipedia.org/wiki/Elysium_(film)
they’re sending you to the space stations. They’re perfectly happy in their coastal mansions.
They will be slaves too… their golden cages policed by centrally controlled AI and robots capable of killing them, or ejecting them into exile amongst the latter day yahoos and baying zombis of the earthbound technoslums.
What’s new about this? It’s been 50%+ for years and started slowly increasing over last 30 years or so.
Mish, can you explain why the MSM keeps praising the resiliency of an economy that, in the trenches, seems ready to drop off a cliff taking all but the top 10% with it? Is it so important politically to put lipstick on this pig? Even Larry Summers came out today insisting that all is favorable in the labor market. I guess I need to learn to appreciate the importance of 100,000 more McDonald and nursing home career opportunities.
The business model of the MSM is such that, when their opponents are in charge, they can only make money through fearmongering against a bogeyman; when their favourites are in power, they can benefit from corruption: grift and access; as well.
Nixon on January 30, 1974, State of the Union address:
““There will be no recession in the United States of America.”
Little did he know, or more correctly, little did the NBER know, America had entered a recession two months earlier.
By Dec 1974, Shiskin in the NYT:
“According to a recent Louis Harris poll, 65 per cent of the people in the United States think the country is now in a recession. Administration officials have acknowledged that we are in a recession, and most economists and newspaper correspondents now take it for granted.”
But not the NBER. In his Dec. article Shishkin quotes the head of the NBER:
““Until the contradictions in the data run their course, I don’t think we’re able to say we are in a recession.”
Over a full year into the recession and it had still not been called a recession. I can’t find the date when NBER actually called it, as they don’t like to advertise these annoying little details, but it was in 1975.
Unemployment did not peak till a full 16 months into the recession in March 1975. During that recession, the DJIA fell by 45% and the FT30 by 70%. It took 20 years for the stock market to recover in real terms.
And all this happened with a near 8% savings rate and in the midst of The Great Inflation. This recession coined the term “stagflation”. What happens when you get a recession in the midst of a Depression (ie extended stretches of below trend growth), like we’ve been in since Aug 2007? We don’t have as many examples, the most recent being 2007-9 and then 1937-8. They did not go well.
It’s hard to say what will happen here. No two recessions are exactly identical. The ongoing banking crisis is still haunting the shadows, threatening to pop up at a moment’s notice, like a 1am press release from BNP. If the crisis reappears, and triggers further credit contraction, like 07-09, this could be quite serious.
And engineered soft landings are essentially a myth. Especially when global central banks are fighting the opposite foe.
@Solon, and Mish, combine this article on 61 percent of workers, with the Bank picture i dug up:
• For the top 50 US banks, deposits are only 60% of their total Assets. (The rest 40% is inter-bank bloat like bank to bank lending, FHLB slush galore etc.)
• For the top 30 US banks which have data as of 4Q22, Assets were ~$22 Trillion, Deposits were 50.35% of the assets ~$11.266 Trillion;
• For the top 30 banks which have data, within the category of deposits ALONE, the sum of deposits in accounts denominated LESS THAN $250K (erstwhile FDIC insurance limit) amount to only ~$3.62 Trillion. That is 32% of deposits.
• Takeaway: in our “macro economy”, the Mom and Pop pedestrian balances (<$250K, mind u, the average American has a FAR LOWER balance! FAR LOWER than 250K!), the pedestrian Mom/Pop balances account for ONLY 18% of bank assets: (60% deposit-to-asset ratio x 32% pedestrian-deposit-to-total-deposit ratio).
Just imagine what they think of "people". And yet Macroeconomics throws around ugly analyses as if all bank assets are "the people's money". LOL. It's ugly.
Mish please call them citizens not consumers. Citizens have some hope of addressment of their plight, consumers are the equivalent of what? Serfs?
“citizen” is a theoretical concept; in practice, you economics: capital asset base and purchasing power, and whether you are a growing concern financially, is what determines your rights in practical terms – how else will you pay for lawyers?!
Excellent post….
If people are living paycheck to paycheck then it’s time to think about how we can profit from the situation.
Check out tickers EZPW, CURO, WRLD because their profits and stock prices are cyclical and tied to desperate people and desperate times. When the deadbeats can’t pay, the vultures will prey and these companies know how to squeeze blood out of turnips with high interest rate short term loans.
And when the recovery starts and collections need to happen to help those improve their credit scores, it will be time to buy ECPG. I am thinking about finally by LEAPS on ECPG. Will wait until there is a pullback.
A new money train is approaching, who wants to board for profits? Choo! Choo!
Many a Gravy Train has turned into a Gravy Boat and sunk. Many boasters I knew in 2006 got their clocks cleaned in 2007-2009. The fact that spending above ones means is happening at every income level, shows how leveraged this economy is on borrowed money. What can’t be paid won’t be paid. Higher debt and cheaper money could no longer forestall the inevitable economic seasons. Most assets are way overpriced and will find their true value when leverage is exhausted.
Invest in crime stocks then, and luxury brands of course.
“Excellent post….
If people are living paycheck to paycheck then it’s time to think about how we can profit from the situation.”
Come on Mish, what are you waiting for? We need another post encouraging the multiple alias scamartist Realist. All other readers of your blog are complete idiots and need to be put in their place.
“Somehow I don’t fashion PapaDave as a person who recommends investing in speculative bubbles.” (Mish)
Realist (papafraud, mpos, jeffgreenscam, imgreenscam) lost his shirt in Plug Power, Ballard Power, etc.
How many of those paycheck to paycheck workers are driving $80,000 pickup trucks they bought on credit?
Or have mortgages tuned to the hilt, but live in a home of their dreams. Nothing wrong with that if they shoulder the consequences.
Unfortunately, in a bailout nation that’s usually someone more prudent than them.
But, but.. the realtor told them to wait for the pivot.
Or EV’s
And yet our overlords keep pilling on taxes, when will it stop? They could care less it seems.
They couldn’t care less.
I paid a tariff on an imported good today and I liked it. I would not have bought it if there was an American alternative, but import tariffs will end up producing an American Alternative.
… and Americans keep voting Democrat/Republican.
… and not supporting good people in the primaries because according to the MSM they “do not look presidential” or “they are crazy”, so they “will not beat the other party”.
… and nothing will change – elite keeps winning.