High-earning Americans living pay cheque to pay cheque after inflation surge

People across various income brackets are affected by the steep rise in prices, new survey finds

About 81 per cent of US adults across a variety of income brackets said they have at least one credit card, according to a new survey. AP
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About 36 per cent of Americans earning an annual income of between $200,000 and $250,000 lived pay cheque to pay cheque in April as inflation in the world's largest economy remains at a 40-year high, according to a new survey by data provider PYMNTS.

Forty-two per cent of consumers earning more than $100,000 per year also reported living pay cheque to pay cheque in April — down from 49 per cent in March 2022 but an increase from 40 per cent in April last year, the survey, which polled 4,048 US consumers from April 6 to April 13, found.

“Approximately three-in-five US consumers devote nearly all of their salaries to expenses with little to nothing left over at the end of the month,” PYMNTS said.

“While costs everywhere are going up, more pandemic-related restrictions are lifting across the country, meaning that staying in and saving money may be harder than ever.”

Inflation in the US rose 8.3 per cent over the previous 12 months in April, with energy and food prices recording the biggest increases, the US government’s April 2022 Consumer Price Index report found.

It marked the seventh straight month of price increases in excess of 6 per cent. The CPI shot up 8.5 per cent in March, the largest year-on-year gain since December 1981.

While Russia’s military offensive against Ukraine, which began on February 24, led to a sharp rise in commodity prices, inflation was already a problem because of stretched global supply chains as economies slowly recovered from the Covid-19 pandemic after governments across the world had announced major stimulus measures.

Meanwhile, about 61 per cent of US consumers across a range of income brackets lived from one pay cheque to the next in April, eroding their savings potential, PYMNTS said.

This compares with 52 per cent of US consumers who lived from one pay cheque to the next in April 2021.

Forty per cent of US consumers were living from one pay cheque to the next without difficulties paying monthly bills, up from 31 per cent in April last year, the survey found.

However, the number of people facing issues paying their bills rose to 22 per cent in April compared with 21 per cent in the same period last year, the research showed, including between 10 per cent to 12 per cent of consumers in higher income brackets.

About 19 per cent of middle-income consumers, or those earning from $50,000 to $100,000, and 36 per cent of lower-income consumers — those earning less than $50,000 — had issues paying their bills, PYMNTS said.

The survey also found that US consumers earning more than $250,000 were 40 per cent more likely to use financial products such as credit cards and personal loans, compared with those earning less than $50,000 a year.

Credit card usage ranges from 47 per cent among lower-income consumers to 73 per cent among consumers in the highest income bracket.

The share of those taking on personal loans ranges from 9 per cent to 14 per cent, the research found.

Only 15 per cent of US consumers who earn more than $250,000 annually have not made a credit payment in the past three months compared with 39 per cent of those earning less than $50,000.

About three quarters of consumers earning more than $100,000 have made a credit card payment during the same period, the research found.

Overall, credit card ownership remains high in the US, with 81 per cent of adults of all income brackets saying they have at least one card.

The share grows as annual income increases, with 95 per cent of consumers who earn more than $250,000 a year saying they hold at least one credit card.

Meanwhile, 63 per cent of the highest earners in the US also have above average credit scores compared with18 per cent of consumers earning less than $50,000 a year, the survey found.

Updated: June 04, 2022, 4:30 AM