More than one half of all U.S. consumers lived paycheck to paycheck last month, says a new LendingClub report released this week. LendingClub, a peer-to-peer lending company, is reporting that 58% of U.S. consumers were basically living paycheck to paycheck last month, an increase of 4% over last year.
With rates of inflation at a 40-year high, taxpayers are still struggling financially as the economy starts to slow, as reflected in the latest decline in retail sales last month.
“Consumers have experienced a tough last couple of years as different factors have affected their financial lifestyle and there seems to be little relief in sight,” said Anuj Nayar, the financial health officer of LendingClub.
65% of all paycheck-to-paycheck consumers state that they have “experienced a financially stressful event in the past 3 years, with sudden income disruptions such as job loss being the most common,” LendingClub says.
So many of these financial disruptions, such as losing one’s job, are due to the pandemic and its adverse economic effects, LendingClub has noted. Among those who report experiencing a financially stressful event, 77 percent say they have trouble paying their bills each month.
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About half of consumers who live paycheck to paycheck report that their salary only covers basic expenses. An additional 19% report spending more than they earned in the past six months. Nayar stated that consumers could leverage credit as a financial tool to manage their spending.
“Setting an automatic transfer to a savings account, even if it’s a small amount, can help you weather the next storm because it’s not if you’ll need the cash, but when. Credit can also be an effective tool to help with expenses during financially distressing events, but those struggling financially should exercise caution,” Nayar said.
“Credit card interest rates are rising, and, if you don’t intend to pay your bills in full monthly, you could potentially get into a steep revolving debt trap. For those looking for relief, consider refinancing high-interest debt into a lower cost installment loan.”
When it comes to solutions for inflation, it does not appear that President Joe Biden has any that would help Americans immediately. A beach-strolling President Biden even lashed out at a reporter, as Americans struggle to keep their heads above water amid inflation-fueled price hikes, for daring to ask about the possibility of a US recession.
Near his vacation home in Rehoboth Beach, Del., Biden was asked about economic experts “saying a recession is more likely than ever,” he barked: “Not! The majority of them aren’t saying that. Come on, don’t make things up, OK?”
“Now you sound like a Republican politician,” the president griped, before realizing how he came off and insisting, “I’m joking. That was a joke.”
Two days after falling off his bike nearby, the president emerged and proceeded to call for higher taxes on the wealthy while blaming oil companies for record-high prices at the pump.
“But all kidding aside, no, I don’t think it is [inevitable]. I was talking to [former Treasury Secretary] Larry Summers this morning and there’s nothing inevitable about a recession,” Biden said.
Biden also said on the beach that he may make a decision this week on whether to ask Congress to waive the federal gas tax of 18.3 cents per gallon.
“Yes I’m considering it. I hope I have a decision based on the data I’m looking for by the end of the week,” said the president, whose poll numbers have hit new lows due to frustration about the highest inflation since 1981.
Other polls show dozens of Democrats would rather have someone besides Joe Biden.
Photo: video screencap.