The economic challenges faced by Americans since 2021 continue to be a source of stress, particularly as the Christmas holiday nears. A LendingClub study has revealed that 62% of Americans are living paycheck to paycheck, a rise from 58% earlier in March.
62% of Americans Living Paycheck to Paycheck During Holiday Seasonhttps://t.co/WmluPpu6sD
— EMPIntelligenceNet© (@Megavolts001) December 19, 2023
This statistic underscores the increasing dissatisfaction with the economic policies under President Joe Biden. According to polls, only 14% of voters believe that these policies have been beneficial.
Despite economic difficulties, holiday spending is projected to reach between $957.3 billion and $966.6 billion, setting a new record. This increase in spending is notable, especially as the cost of goods has significantly risen due to the most severe inflation the U.S. economy has experienced in four decades.
The holiday season’s spending surge is not without its consequences. With credit card debt surpassing $1 trillion, a TD Bank survey indicates that most shoppers are likely to spend beyond their means, with many expecting to accumulate additional debt.
The Forbes Advisor survey adds context to this issue, revealing that nearly half of those living paycheck to paycheck intend to spend as much or more on holiday shopping as they did last year. This is concerning, considering the average American has less than $2,000 in emergency savings.
The rising interest rates on credit card debts exacerbate these financial challenges. Bankrate analyst Sarah Foster highlights the critical need for prudent budgeting of credit purchases to avoid the severe impact of high interest payments and potential defaults. Alia Dudum from LendingClub warns of the dangers of falling into a debt cycle due to credit card use, noting that those carrying a balance are more prone to financial hardship.
Despite the Federal Reserve’s claims of inflation easing over the past year, the relief for household finances is minimal. Moreover, while potential interest rate cuts by the Fed might boost the stock market, such actions could further inflame inflation.
In this context, the current economic situation, often referred to as “Bidenomics,” has made living paycheck to paycheck a common reality for many, with the holiday season bringing more financial burden than celebration for numerous families.