Americans Living Paycheck to Paycheck
Joe Biden says some Americans are “better off” under his administration, even with inflation eroding their purchasing power. Yet a Lending Club report finds most Americans are worse off.
- Sixty-three percent of Americans are living paycheck to paycheck. That is near the 64 percent historic high hit in March and 6 percent higher than the number a year ago.
No savings: The U.S savings rate fell to 3.3 percent in the third quarter of this year, the lowest level since the Great Recession and the eighth-lowest level since 1947. Bankrate estimates 56 percent of Americans could not cover an unexpected $1,000 expense with savings. So continuing inflation will likely force more people to either reduce their standard of living or run up credit card debt.
High debt: Americans did a great job of reducing their debt during the pandemic. But now that lockdowns are over and life is returning to normal, the average credit card debt per household has spiked to $8,942.
- That means the average household is paying $357 a month in minimum credit card bills while they consider taking on even more credit card debt to buy groceries and other things.
Bad budgeting: The inflation crisis is exacerbating a savings crisis that only better budgeting can solve.
- The average American household spends 35 percent of its take-home pay on housing (advisers recommend keeping this under 30 percent).
- They spend 16 percent of their take-home pay on transportation (advisers recommend no more than 15 percent).
In most cases, a smaller house, cheaper car and frugal shopping habits would allow Americans to save 10 percent of their incomes.
Prophecy says: The Bible indicates America’s economic problems will get worse. The Prophet Haggai describes current and future economic conditions this way: “Ye have sown much, and bring in little; ye eat, but ye have not enough; ye drink, but ye are not filled with drink; ye clothe you, but there is none warm; and he that earneth wages earneth wages to put it into a bag with holes” (Haggai 1:6).