Consumers’ Struggle to Pay Bills Reaches New Volatility in 2023

This year’s financial lifestyle improvements for the individual consumer were all but wiped out between May and June.

Broadly speaking and only looking at year-over-year numbers, it can seem like there is only good news when it comes to the number of consumers struggling to make ends meet.

As noted in July’s “New Reality Check: The Paycheck-to-Paycheck Report,” a PYMNTS and LendingClub collaboration, the rate of those surveyed living paycheck to paycheck with issues paying bills has declined year over year. The 0.3 percentage point drop between June 2022 and June 2023, represents a relatively marginal 1.4% dip in the share of consumers falling into this financial lifestyle.

The numbers may paint an optimistic picture, especially given inflation’s relentless price increases on essentials such as clothing and shelter, but they may be glossing over more recent struggles. Consumers’ financial lifestyles are experiencing a sharp turn downward, with the latest month-over-month numbers suggesting improvements since the start of the year have effectively been erased. This deeper data dive for the same consumer segment broken down by month, from proprietary research created for the same “New Reality Check” report, clarifies that what could seem like general progress has been much more of a financial security roller coaster.

Regardless of income, the shares of consumers living paycheck to paycheck and struggling to pay bills rose from May to June. PYMNTS’ data finds that 33% of those earning less than $50,000 annually fell into this financial lifestyle, as did 19% of those earning between $50,000 and $100,000 and 12% of those earning more than $100,000 per year. For all but two months for those earning more than $100,000 annually, each of these shares represents the highest rates for each income demographic in 2023.

 An age cohort analysis also sees that each demographic’s share of consumers living paycheck to paycheck with issues paying bills has followed a more volatile path in 2023 than when comparing financial lifestyle by income bracket. However, each generation saw sharp increases in their share of consumers with bill pay issues between May and June after the previous month’s declines.

The next few months will reveal if the latest numbers of paycheck-to-paycheck consumers with bill pay issues signal the start of a trend or are a set of data outliers. While other factors, such as rising consumer spending (on essentials, at least), are a good sign, other variables such as student loan repayments waiting in the wings could cause further volatility to consumers’ financial lifestyles.