America’s Household Income Continues Three-Quarter Slide

Paycheck to Paycheck

U.S. household income declined this summer for the third straight quarter as stock prices fell.

That’s according to the Federal Reserve’s latest Financial Accounts of the United States report, which showed that the net worth of the country’s households and non-profits dropped to $143.3 trillion in this year’s third quarter.

“The value of directly and indirectly held corporate equities decreased $1.9 trillion and the value of real estate increased $0.8 trillion,” the report said.

The report showed household debt increased by 6.3% at an annual rate during the quarter, while consumer credit grew at an annual rate of 7%.

The Fed’s findings come as Americans already have a gloomy outlook when it comes to the state of the economy, despite what the government says. As we reported last week, many consumers believe inflation is far worse than what the government has reported.

Around 90% of consumers say their paychecks have not kept up with inflation, research by PYMNTS has found, and this decline in purchasing power could explain the growing gap between what is being reported by Washington and what is being felt by Main Street shoppers, who are increasingly cutting back on spending.

The Fed report also arrived during a holiday season in which some 40% of Americans plan to use some sort of financing – either credit cards or buy now, pay later programs — to cover their spending, as recent research by PYMNTS and LendingClub has shown.

Speaking with PYMNTS last month, LendingClub Financial Health Officer Anuj Nayar said he found that trend unsettling.

“If you’re using credit cards for convenience, knock yourself out,” Nayar told PYMNTS. “But most people are not.”

“Credit card debt is at an all-time high. Credit card rates are reaching all-time highs,” he added. “What the report showed was that, specifically for those who are struggling to pay their bills, they are almost saturating their credit card balances. They have on average, I think, a $4,500 balance, and they are at 97% of that.”