New Economy Report Raises Eyebrows
We’ve got some surprising news that might have many of us scratching our heads. It turns out that a growing number of Americans making six-figure salaries are worried about paying their monthly bills. Yes, you heard that right – even those earning between $100,000 and $150,000 are feeling the financial squeeze.
According to a recent survey published by the Federal Reserve Bank of Philadelphia, more than 30% of respondents in this income bracket are concerned about making ends meet over the next six months. That’s a significant jump from last year, where only 21.3% expressed similar concerns. And it’s not just those on the lower end of the six-figure scale. About 32.5% of individuals earning more than $150,000 are also worried about paying their bills, up from 21.7% the previous year.
Interestingly, these affluent Americans are actually more worried about their finances than many people earning less money. For instance, 29.8% of individuals making between $40,000 and $69,999 are concerned about their financial stability, up from 23.9% last year. However, the most concerned group remains those earning less than $40,000, with about 40% worried about making ends meet.
So, what’s going on here? By many measures, the economy seems healthy. The labor market is solid, with employers adding 272,000 new workers in May, and job openings remain high. The unemployment rate is holding steady at around 4%. But there’s a darker side to this rosy picture. Americans are grappling with the highest interest rates in two decades and persistently high inflation, which has made everyday necessities like groceries, rent, and gasoline far more expensive.
While inflation has come down from its peak of 9.1% in June 2022, it’s still above the Federal Reserve’s 2% target. Compared to January 2021, prices are nearly 20% higher. This is hitting families hard, especially when it comes to essential expenses. Grocery prices have surged by more than 21% since the start of 2021, shelter costs are up 18.37%, and energy prices have skyrocketed by 38.4%.
These price hikes are particularly devastating for lower-income Americans, who spend a larger portion of their paychecks on necessities and have less flexibility to save money. The typical U.S. household needed to pay $227 more a month in March to buy the same goods and services it did a year ago. On average, Americans are spending $784 more each month compared to two years ago and $1,069 more than three years ago.
As they spend more on everyday goods, Americans are burning through their savings and increasingly turning to credit cards to cover basic expenses. This financial strain is contributing to growing pessimism among U.S. households about their economic situation under President Biden’s administration.
A recent Gallup poll found that Americans are less optimistic about the U.S. economy than in recent months, with only 38% of voters expressing confidence in Biden to manage the economy effectively. In contrast, 47% of respondents in 2020 trusted former President Trump to handle the economy well.
Gallup highlighted that Biden’s subpar economic rating could have significant electoral implications. Not only does he have the lowest economic rating of any president seeking reelection since Gallup began tracking this in 2001, but independents also trust his opponent more than him.