People earning more than $100,000 per year are not sailing over the current economic troubles. In fact, according to December numbers, 16% of high-income consumers are struggling to make ends meet, a 45% increase year on year.
Inflation has reduced consumer budgets across income and age groups, with the average American spending 22% of their income on basics like food, clothing, and shelter. Some necessities, such as transportation and healthcare, are not covered in this category.
Because wage increases continue to lag behind rising cost-of-living increases, the fraction of consumers living paycheck to paycheck was always going to include people with greater incomes. A recent collaboration with LendingClub, “New Reality Check: The Paycheck-to-Paycheck Report,” examines customers’ financial lifestyles by salary group.
Earners earning more than $100,000 were the fastest growing group, with 8 million joining the ranks. It’s no surprise that higher-end retailers like Whole Foods have had to cut back on spending.
The halt of rising prices may take longer than anticipated, since the Federal Reserve has indicated that it would continue to raise interest rates in response to economic indicators. Consumers should not be surprised, as more than half of those questioned expect rising prices and interest rates until 2023.
