Amid inflation, more middle-class Americans struggle to make ends meet

[beijingwalker]

Amid inflation, more middle-class Americans struggle to make ends meet​

PUBLISHED WED, JAN 18 20232:43 PM EST
Jessica Dickler@JDICKLER

KEY POINTS

• Many people still identify with being in the middle class, although that doesn’t mean what it used to.
• Inflation is largely to blame.

As inflation spiked, Americans in the middle class were particularly hard hit.

For them, prices increased faster than their income, according to a September report by the Congressional Budget Office. Households in the lowest and highest income groups saw their income grow faster than prices over the same time period, the report found.

Even though middle-class wage growth is high by historical standards, it isn’t keeping up with the increased cost of living, which in December was up 6.5% from the prior year — making it harder to live the same lifestyle previous middle-class generations did.

63% of Americans are living paycheck to paycheck
Nearly three-quarters, or 72%, of middle-income families say their earnings are falling behind the cost of living, up from 68% a year ago, according to a separate report by Primerica based on a survey of households with incomes between $30,000 and $100,000. A similar share, 74%, said they are unable to save for their future, up from 66% a year ago.

The middle class is shrinking​

Economists’ definitions of middle class vary. The Pew Research Center defines middle class as those earning between two-thirds and twice the median American household income, which was $70,784 in 2021, according to Census Bureau data. That means American households earning as little as $47,189 and up to $141,568 are technically included, although the median income is roughly $90,000.
As is often cited, the share of adults who live in middle-class households is shrinking. Now, 50% of the population falls in this group as of 2021, down from 61% 50 years earlier, according to Pew.

Their share of the country’s wealth is also getting smaller, while the top 1% continue to amass more and more, several other studies show.

‘It is only going to get worse’​

Financial well-being is deteriorating overall, according to a recent “Making Ends Meet” report by the Consumer Financial Protection Bureau.
Across the board, households have been slow to adjust their spending habits. Even as prices rise significantly, consumer spending hasn’t changed that much.
To bridge the gap, Americans are dipping into their savings accounts and running up credit card balances. That leaves them more financially vulnerable in the event of an economic shock.
With economists now forecasting a possible recession, 62% of middle-income households said they need to get financially prepared, Primerica also found.

“Unfortunately, I think it is only going to get worse,” Ted Jenkin, CEO at Atlanta-based Oxygen Financial and a member of CNBC’s Advisor Council, said of Americans’ financial standing.

Hope for the American dream is at an all-time low, especially among the middle class, according to the latest Gallup poll, which tracks Americans’ assessments of the next generation’s likelihood of surpassing their parents’ living standards.

Now, 59% of middle-income Americans — or those making between $40,000 and $100,000, according to Gallup — said it is very or somewhat unlikely that today’s young adults will have a better life than their parents compared to only 48% of those with annual household incomes under $40,000 who feel that way.

Amid inflation, ‘you really have to get disciplined’​

“As middle-income families prepare for a possible recession this year, it’s more vital than ever that they take control of their personal finances by addressing debt, setting a budget and keeping spending in check,” Glenn Williams, Primerica’s CEO, said in a statement.

Experts often recommend starting with high-interest credit card debt. Credit card rates, in particular, are now more than 19%, on average — an all-time record. Those annual percentage rates will keep climbing, too, as the Federal Reserve continues raising its benchmark rate.

If you currently have credit card debt, tap a lower-interest personal loan or 0% balance transfer card and refrain from putting additional purchases on credit unless you can pay the balance in full at the end of the month and even set some money aside.

“You really have to get disciplined or you’re going to outspend your income,” Jenkin said.

To curtail your spending, Jenkin said some simple financial hacks can help, such as going to the grocery store less and cutting back on online shopping.

“Grocery stores are just like Las Vegas; they are there to separate you from your wallet.” Meal planning is one way to edit down your shopping list to weekly essentials and save money.

Disabling one-click ordering or deleting stored credit card information can also help. “Anyone that shops on Amazon and has a stored credit card, you are basically pouring lighter fluid on your budget,” Jenkin said.

Jenkin recommends waiting 24 hours before making an online purchase and then using a price-tracking browser extension such as CamelCamelCamel or Keepa to find the best price.

Finally, tap a savings tool like Cently, which automatically applies a coupon code to your online order, and pay with a cash-back card such as the Citi Double Cash Card, which will earn you 2%.

Amid inflation, more middle-class Americans struggle to make ends meet

Financial well-being is deteriorating overall but middle-class households have been particularly hard hit.

www.cnbc.com

 

[Imran Khan]

middle class is doomed all over globe today

 

[beijingwalker]

Faced with a $1,000 emergency, most Americans say they wouldn't have the money​

BY KHRISTOPHER J. BROOKS
JANUARY 25, 2023 / 6:02 PM / MONEYWATCH

A majority of Americans say they would struggle to pay for a $1,000 emergency expense, with a record share saying they would have to turn to credit cards to cover the cost, according to a new study released Wednesday.

Only 4-in-10 Americans said they could cover an emergency of $1,000 or more using funds from their savings account, the new Bankrate survey found. Although that's roughly the same share of Americans who found themselves in this financial position last year, about 25% of Americans surveyed said they would need to cover an unexpected $1,000 expense using a credit card, the highest percentage on record, Bankrate said.

"With 1 in 4 Americans telling us they'd react to a large emergency expense by using a credit card, their timing couldn't be worse," Mark Hamrick, Bankrate's senior economic analyst, said in a statement.

That's because credit card rates have jumped following the Federal Reserve's series of interest rate hikes during the last year, which are designed to battle the highest inflation in four decades. At the same time, almost 7-in-10 Americans told Bankrate they are saving less due to inflation, placing more households in a precarious financial position just as the U.S. economy is edging toward a possible recession.

Relying on credit cards to cover emergency expenses could cause a deeper financial hole given the recent surge in credit card rates, Hamrick said. The average interest rate on a new credit card is now 21.4%, while existing cards have an average rate of 19%, according to WalletHub. Those figures compare to 16.6% and 13.4%, respectively, in 2011.

"On average, credit card interest rates are the highest we've seen and are slated to go higher as the Federal Reserve continues to hike," Hamrick said. "Under the best of circumstances, this debt should be paid before costly interest charges hit the account."

Adults between 18 to 26 as well as Americans who earn less than $50,000 said it would be more difficult for them to pony up $1,000 for an emergency compared with older and higher-earning respondents, according to the survey, which polled more than 1,000 people in mid-December.

Personal finance experts typically recommend that people have at least three months' worth of income saved to tide them over in the event of a job loss, health problem or other unplanned situation that crimps their cash flow.

Rising interest rates, higher prices due to inflation and job losses are the main three reasons people said they can't save $1,000, the Bankrate survey found.

Faced with a $1,000 emergency, most Americans say they wouldn't have the money

Americans are increasingly relying on their credit card to cover any emergency expenses, a new Bankrate survey said.

www.cbsnews.com

 

[StraightEdge]

63% of Americans are living paycheck to paycheck

No wonder why so many of them are on onlyfans.

 

[K_Bin_W]

Things are not good in N. America, Inflation is quite high in Canada, and the govt. has raised interest rates a few times, seems there is no end in sight.

 

[SeaMermaid]

No wonder why so many of them are on onlyfans.

McDonalds is expensive now

 

[beijingwalker]

Instead of lifting years long tariffs on the Chinese products to bring down the inflation, US plans to put more tariffs.

 

[VCheng]

Instead of lifting years long tariffs on the Chinese products to bring down the inflation, US plans to put more tariffs.

What is the date on that story?

 

[beijingwalker]

What is the date on that story?

Don't know, they are working no new tariffs and sanctions, they enjoy shooting themselves in the foot.

 

[VCheng]

Don't know, they are working no new tariffs and sanctions, they enjoy shooting themselves in the foot.

And your species just enjoys flinging poo as social recreation. Trump has not been President for how long now? That alone tells us how old that story you are crowing about really is.

 

[beijingwalker]

And your species just enjoys flinging poo as social recreation. Trump has not been President for how long now? That alone tells us how old that story you are crowing about really is.

Trump made that tariff, but it's stil there under Biden now. I m talking about the tariff, not Trump and Biden.

 

[VCheng]

Trump made that tariff, but it's stil there under Biden now. I m talking about the tariff, not Trump and Biden.

So you want the tariffs removed out of your sincere interest in the well-being of the American people. Oh, I am so touched. NOT.

 

[beijingwalker]

So you want the tariffs removed out of your sincere interest in the well-being of the American people. Oh, I am so touched. NOT.

No, I just think that tariff is stupid, US just cut its nose to spite its face

 

[VCheng]

No, I just think that tariff is stupid, US just cut its nose to spite its face

Or may be tariffs increase the landed price of Chinese goods in USA markets, making them less competitive in the long run. That would be a good thing for other suppliers, actually.

 

[beijingwalker]

Or may be tariffs increase the landed price of Chinese goods in USA markets, making them less competitive in the long run. That would be a good thing for other suppliers, actually.

China hits record trade surplus every passing month, US just pays more money to buy Chinese products from the third countries, it makes US even more stupid.