Rising costs have chipped away at most Americans’ standard of living.
As inflation pressures continue, two-thirds of working adults said they are worse off financially than they were a year ago, according to a recent report by Salary Finance.
To make ends meet, many are dipping into their cash reserves or going into debt.
Nearly three-quarters, or 72%, of consumers have less in savings than last year, a jump from 55% who said the same in February, the report found. And 29% said they have wiped out their savings entirely. The report is based on a survey of 500 adults in August.
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The consumer price index, which measures the average change in prices for consumer goods and services, rose more than expected again in September, still hovering near the highest levels since the early 1980s.
The rising cost of living is bad news for workers, whose average hourly earnings declined 0.1% for the month on an inflation-adjusted basis and are off 3% from a year ago, leaving more Americans living paycheck to paycheck.
Now, 32% of adults said they regularly run out of money between pay periods, according to Salary Finance.
Across the board, American workers are struggling financially.Asesh SarkarCEO of Salary Finance
Even high earners are struggling more than last year, Salary Finance said. Of those making more than six-figures, roughly half are having a harder time staying afloat and have less in savings than they did in 2021.
A separate report by LendingTree also found that 40% of adults said they are less able to afford their bills compared with one year ago.
“Across the board, American workers are struggling financially, regardless of gender, race, ethnicity, sexual orientation, or earnings; in fact, half of American workers making over $100,000 are worse off this year,” said Asesh Sarkar, Salary Finance’s CEO.
‘The federal funds rate must go higher from here’
For its part, the Federal Reserve has indicated more interest rate increases are coming until inflation shows clear signs of a pullback.
The central bank “continues to see a bright green light with respect to future interest rate increases,” said Mark Hamrick, senior economic analyst at Bankrate.com.
“Based on the latest snapshots of inflation, they believe the target range for the federal funds rate must go higher from here,” he said. “There’s no pivot yet in sight, only a push to higher ground.”