Inflation Is Paycheck-to-Paycheck Economy’s Enemy


When it comes to crowning “The Public Enemy,” Jimmy Cagney’s got nothing on inflation.

Regardless of whether you’re a fan of film noir, you wouldn’t be remiss in calling inflation the scourge of the paycheck-to-paycheck economy, pinching purchasing power away from everyone from the top-earning echelons to the lowest.

For consumers living paycheck to paycheck, the bite is especially egregious. And that accounts for a bigger population than you’d think. In fact, PYMNTS research has found that 61% of us spend the bulk of our paycheck on meeting daily, monthly and weekly obligations and have little, if anything, left over to sock away for a rainy day.

Read also: 36% of Consumers Earning $250K+ Now Live Paycheck-to-Paycheck

The balancing act affects even the ostensibly well-off among us.

The data shows that 36% of consumers earning $100,000 to $150,000, 31% earning $150,000 to $200,000, 26% earning $200,000 to $250,000, and 24% earning more than $250,000 live paycheck to paycheck without issues paying bills, and another 10% to 12% of those income groups reported problems. It stands to reason that lower-income Americans would be hitting even harder.

Trouble Looms

The fact that inflation is running at more than 8.5% annually spells continued trouble for most of us. Each dollar that has to be stretched further means that much less left over to be put to work elsewhere. We’re seeing signs that credit is a lifeline that only goes so far — the paycheck-to-paycheck population is using 40% of its available credit already.

And savings? Well, there’s not enough on hand to truly serve as a buffer. As recently as last month’s reading, the average paycheck-to-paycheck consumer had a bit more than $3,900 in the bank.

But given the soaring rents, the price of gas at the pump, the fact that credit card debt is more expensive now … well, the cash cushion may run a bit threadbare. After all, certain obligations revolve month after month, and have to be paid or consumers risk the repercussions of being in arrears.

Here is where we are seeing some fault lines that may grow wider if inflation keeps being a problem.

Something’s gotta give, as the old song goes. Might we posit that credit card debt would fall by the wayside as a result of the new public enemy? After all, getting around is critical, and so are housing payments. But even as we use our wheels to get to work, or go grocery shopping, we need to put gas in the tank.

There isn’t that much breathing room to juggle it all — and soon, we’ll all have to confront “The Public Enemy.”

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NEW PYMNTS DATA: THE TAILORED SHOPPING 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 getting it right and where they need to up their game to deliver a customized shopping experience.

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