In a striking development that underscores the shifting financial landscape, a growing number of Americans with six-figure salaries are finding themselves worried about making ends meet. According to a recent survey by the Federal Reserve Bank of Philadelphia, more than 30% of respondents earning between $100,000 and $149,999 expressed concerns about paying their monthly bills in the next six months. The anxiety extends even further up the income ladder, with about 32.5% of individuals earning over $150,000 sharing similar worries. This marks a notable increase from the previous year’s figure of 21.7%, revealing a broader financial unease among higher earners.
Interestingly, financial trepidation appears to be more pronounced among affluent Americans compared to some of their lower-earning counterparts. While it might seem counterintuitive, wealthier individuals are indeed more worried about their finances than many people earning less than $40,000. According to the survey, approximately 40% of those making under $40,000 are concerned about making ends meet, highlighting the pervasive nature of financial stress across income brackets.
The labor market, meanwhile, continues to exhibit robust activity, albeit at a moderated pace. Employers added 272,000 new workers in May, and job openings remain high, while the unemployment rate holds steady at around 4%. Despite these promising job market indicators, Americans are grappling with the highest interest rates seen in two decades and persistently high inflation. The cost of everyday necessities such as groceries, rent, and gasoline has ballooned, putting further strain on household budgets. For instance, grocery prices have surged more than 21% since the start of 2021, shelter costs have soared 18.37%, and energy prices have climbed by a staggering 38.4%.
These price hikes are particularly devastating for lower-income Americans, who spend a larger proportion of their already stretched paychecks on necessities. With limited flexibility to save, these households are particularly vulnerable to economic shocks. The typical U.S. household had to pay an additional $227 per month in March to purchase the same goods and services as the previous year due to persistent inflation. Compared to two years ago, Americans are shelling out an average of $784 more each month, and a whopping $1,069 more compared to three years ago.
As the cost of living continues to rise, Americans are increasingly depleting their savings and resorting to credit cards to cover basic expenses. This growing reliance on debt to manage day-to-day expenses points to a broader issue of financial instability, even among higher earners. Concurrently, political ramifications are starting to emerge. With President Biden facing low economic approval ratings, the financial concerns of Americans could have significant electoral implications. Notably, independent voters currently express greater trust in his opponent, setting the stage for a heated political battle in the coming election cycle.
In summary, the latest survey highlights a burgeoning financial concern that transcends income levels, revealing the economic pressures faced by both lower and higher earners alike. As inflation continues to erode purchasing power and interest rates remain elevated, the financial landscape remains uncertain, compelling many to rethink their economic strategies and political allegiances.