Inflation is the enemy of the paycheck to paycheck economy

When it comes to crowning “The Public Enemy,” Jimmy Cagney has nothing against inflation.

Whether or not you’re a fan of film noir, you’d be sure to call inflation the scourge of the paycheck-to-paycheck economy, taking away the purchasing power of everyone from the rungs the highest paid to the lowest.

For consumers who live paycheck to paycheck, the bite is particularly glaring. And that’s a bigger population than you might think. In fact, PYMNTS research found that 61% of us spend most of our pay on meeting our daily, monthly and weekly obligations and have little or nothing left to put away for a day’s work. rain.

Read also: 36% of consumers who earn over $250,000 are now living paycheck to paycheck

The balancing act affects even the wealthiest among us.

Data shows that 36% of consumers earn between $100,000 and $150,000, 31% earn between $150,000 and $200,000, 26% earn between $200,000 and $250,000 and 24% earn more than $250,000 live paycheck without bill payment issues, and still 10% to 12% of these income groups reported problems. It stands to reason that low-income Americans would be hit even harder.

Problems loom

The fact that inflation is over 8.5% per year continues to cause problems for most of us. Every dollar that needs to be stretched more means there’s far less left to work elsewhere. We are seeing signs that credit is a lifeline that only goes so far – the paycheck-to-paycheck population is already using 40% of their available credit.

And the savings? Well, there’s not enough room to really act as a buffer. As recently as last month’s reading, the average paycheck-to-paycheck consumer had just over $3,900 in the bank.

But given skyrocketing rents, gas prices at the pumps, the fact that credit card debt is more expensive now…well, the cash cushion might be a bit worn down. After all, some obligations roll over month to month and must be paid or consumers risk the repercussions of being late.

This is where we see fault lines that could widen if inflation continues to be a problem.

Something’s got to give, as the old song goes. Can we assume that credit card debt would go down the drain because of the new public enemy? After all, getting around is essential, as are housing payments. But even if we use our wheels to get to work or run errands, we have to put gas in the tank.

There’s not much wiggle room to juggle it all – and soon we’ll all have to face the ‘public enemy’.

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NEW PYMNTS DATA: THE CUSTOM PURCHASING EXPERIENCE STUDY – MAY 2022

About: PYMNTS’ survey of 2,094 consumers for The Tailored Shopping Experience report, a collaboration with Elastic Path, shows where merchants are succeeding and where they need to up their game to deliver a personalized shopping experience.

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