Research has shown that amid the rising inflation, Americans now spend more than they earn, which has led to the acquisition of more debts.
A June 2022 survey carried out by LendingClub Corp. and Pymnts.com suggests an increase in Americans spending habits during the first six months of the year.
Bloomberg also reported that these consumers represent about 13% of the nation’s total population ie roughly 34 million people.
A breakdown of the data indicated that 15.4% of residents don’t have any savings. Another 22.2% have less than $1000 in savings.
Furthermore, over 30% of residents have between $1,001 and $15,000 in savings, while only 29.3% have over $15,000 in savings.
The United States experienced 40-year high inflation after seeing a 9.1% rise in Consumer Prices in July. Meanwhile, the inflation figure dropped to 8.5% in August.
Many consumers have resorted to using credit facilities for their daily expenses, thereby reducing savings and increasing debts.
Similarly, the survey revealed that some households now live from paycheck to paycheck.
Experts Predict a rise in Americans Consumer Debts
Also, a LendingTree report from July 2022 predicts that 43% of Americans will acquire more debts in the second half of the year.
The prediction estimated that credit cards and auto loans would take over 30% of the total debts.
According to LendingTree’s Chief Credit analyst Matt Schulz, the rising debt situation is a double-edged sword as it could “either (be) a sign of confidence or struggle, and I suspect we’re seeing the effect of both of those in our data.”
Schulz continued that “many people take on debt because they feel good about their financial situation and aren’t too worried about paying a little interest if it gets them what they want or need. Plenty of others take on debt because they have to. There’s no question that both situations are happening right now.”