Low- to moderate-income Americans walloped by higher prices and economic insecurity may have darker days ahead.
Many economists and executives are predicting a recession within the next year — if the U.S. isn’t in one already — as the Federal Reserve increases interest rates to pull back inflation. With both borrowing costs and the prices of consumer goods on the rise, job cuts and a drop in consumer spending could be on the horizon.
That might seem like a terrifying prospect for people struggling to cope with higher rents, increased food costs, and wages that can’t keep up. Already, 65% of employed consumers were living paycheck to paycheck in September, up 5 percentage points from a year ago, according to research findings from LendingClub and PYMNTS released Monday.
“When things are not going well financially, it feels embarrassing and shameful,” said Terri Friedline, an associate professor of social work at the University of Michigan. “Many, many people have financial difficulties, have struggled to pay their bills, or have over-drafted their accounts.”
“‘When things are not going well financially, it feels embarrassing and shameful. Many, many people have financial difficulties, have struggled to pay their bills, or have over-drafted their accounts.’”