While these issues plague all consumers, this demographic has the most consumers just making enough to get by while paying their bills, perhaps as a consequence of being stuck between consumers making less than $50,000 annually who could be eligible for assistance and those making more than $100,000 who may more readily have a savings cushion.
This caught-in-the-middle status may be a main driver in this income demographic’s financial lifestyle, noted in the below proprietary chart created for July’s “New Reality Check: The Paycheck-to-Paycheck Report,” a PYMNTS collaboration with LendingClub. Nearly half — 46% of those making between $50,000 and $100,000 — live paycheck-to-paycheck while still able to make their bills.
Another reason why nearly half of these consumers may be living paycheck-to-paycheck could be the impact the housing prices has on their financial well-being.
This essential cost has been rising along with other inflationary-driven rising prices, and its negative effects are noted in prior PYMNTS’ research, which found that monthly rent has had a very or extremely negative impact on the finances of 27% of middle-income consumers, with 14% of this demographic saying the same for monthly mortgage payments.
Middle-income consumers’ tendency to just get by amid rising prices has may spell trouble for some retailers, as the demographic is exhibiting a leading rate of spending pullback, noted in the below chart created for PYMNTS’ May “Consumer Inflation Sentiment Report.”
Data shows that 73% of these consumers pulled back on retail products, and 60% pulled back on groceries.
Middle-income consumers are partially handling this by switching merchants, and PYMNTS research finds that 16% of this demographic say this change is the most important change they have made as a result of increased prices.
Without the help of assistance or comfort of a cushion, those just treading financially are in their own unique squeeze during the generally rocky consumer landscape, reflected in their pulled-back spending habits. And, until there’s a more significant shift to a smoother path, this group may find itself stuck in this position for some time.
