4 in 10 Consumers Expect Their Incomes to Keep
Pace with Inflation in 2023
Consumers Likely To Shy Away from Large
Purchases Such as Electronics, Appliances and Leisure Travel in
2023
SAN
FRANCISCO, Jan. 30, 2023 /PRNewswire/
-- LendingClub Corporation (NYSE: LC), the parent company of
LendingClub Bank, America's leading digital marketplace bank, today
released findings from the 18th edition of the Reality
Check: Paycheck-to-Paycheck research series, conducted in
partnership with PYMNTS. The Economic Outlook and Sentiment Edition
examines U.S. consumers' expectations for 2023 and how ongoing
inflation and economic uncertainty will impact their spending.
Today's Paycheck-to-Paycheck Landscape
Sixty-four percent of U.S. consumers (166 million) were living
paycheck to paycheck in December
2022, up 3 percentage points from 61% the year prior, with
the most growth seen in higher income brackets. In fact, 9.3
million more consumers are now living paycheck to paycheck, and
eight million, or 86%, of those consumers earn more than
$100,000 annually.
In December 2022, 51% of consumers
earning more than $100,000 annually
said they lived paycheck to paycheck, up 9 percentage points from
42% in December 2021. In contrast,
the shares of middle-income consumers (those earning between
$50,000 and $100,000 annually) and low-income consumers
(those earning less than $50,000
annually) have remained relatively constant over the same period —
sitting at 66% and 78%, respectively, as of December 2022.
The data also finds that an increasing number of consumers
earning more than $100,000 are living
paycheck to paycheck with difficulty paying their monthly bills. In
December 2022, 16% of these
high-income paycheck-to-paycheck consumers struggled to pay their
monthly bills, up from 11% in December
2021.
"The effects of inflation are eating into every American's
wallet and as the Fed's efforts to curb inflation drive up the cost
of debt, we are seeing near record numbers of Americans living
paycheck to paycheck," said Anuj
Nayar, financial health officer at LendingClub. "While the
number of Americans living paycheck to paycheck is close to the
height we saw in the middle of the pandemic, the causes appear to
be very different, as the economy is not sheltering in place like
it was back in 2020."
Consumer Sentiment Heading into 2023
Paycheck-to-paycheck consumers are optimistic about their
personal finances in 2023, yet remain worried about inflation.
According to the research, four out of 10 expect their personal
finances to improve in the next year, up 7 percentage points from
33% in July 2022.
Paycheck-to-paycheck consumers are also the most likely to cite job
upgrades (more than one-quarter) and additional sources of income
(approximately one-third) as drivers of financial improvement in
the coming year.
For paycheck-to-paycheck consumers who think their financial
situation will worsen next year, inflation is the most worrisome
factor, while those not living paycheck to paycheck are most
concerned about economic uncertainty. In fact, approximately
three-quarters of paycheck-to-paycheck consumers cite inflation as
a reason for their pessimism, while two-thirds blame economic
uncertainty. Consumers not living paycheck to paycheck are more
worried about economic uncertainty than inflation, at 72% versus
62%, respectively.
Despite the pessimism, four out of 10 consumers living paycheck
to paycheck expect their incomes to keep pace with inflation in
2023. Even so, the data shows that 90% of wage-earners report that
their pay increases were lost to inflation in 2022, with only 42%
expecting rising pay to offset price increases in 2023.
With inflationary pressures impacting consumers' wallets, many
are likely to shy away from large purchases in 2023, such as
electronics and appliances. This year may also see a reversal in
renewed interest in leisure travel. For example, only 35% of
consumers said they will incur leisure travel expenses in 2023, and
just 24% plan to purchase expensive electronics or appliances this
year.
"If the consumer perception that their incomes will improve this
year is proven true, it will hamper the effects of the Fed to curb
inflationary pressures," added Nayar. "We can expect more and more
Americans of all incomes identifying themselves as living paycheck
to paycheck until we see the economy recover. Now more than ever,
it is crucial for consumers to examine spending and build a cushion
of savings to prepare for the unexpected."
To view the full report, visit:
https://www.pymnts.com/study/reality-check-paycheck-to-paycheck-inflation-income-consumer-finance-spending/
Methodology
New Reality Check: The Paycheck-to-Paycheck Report — The
Economic Outlook and Sentiment Edition is based on a
census-balanced survey of 3,989 U.S. consumers conducted from
Dec. 8, 2022, to Dec. 23, 2022, as well as analysis of other
economic data. The Paycheck-to-Paycheck series expands on existing
data published by government agencies, such as the Federal Reserve
System and the Bureau of Labor Statistics, to provide a deep look
into the core elements of American consumers' financial wellness:
income, savings, debt and spending choices. Our sample was balanced
to match the U.S. adult population in a set of key demographic
variables: 51% of respondents identified as female, 31% were
college-educated and 36% declared incomes of more than $100,000 per year.
About LendingClub
LendingClub Corporation (NYSE: LC) is the parent company of
LendingClub Bank, National Association, Member FDIC. LendingClub
Bank is the leading digital marketplace bank in the U.S., where
members can access a broad range of financial products and services
designed to help them pay less when borrowing and earn more when
saving. Based on more than 150 billion cells of data and over
$80 billion in loans, our advanced
credit decisioning and machine-learning models are used across the
customer lifecycle to expand seamless access to credit for our
members, while generating compelling risk-adjusted returns for our
loan investors. Since 2007, more than 4.5 million members have
joined the Club to help reach their financial goals. For more
information about LendingClub, visit
https://www.lendingclub.com.
CONTACT:
For Investors: IR@lendingclub.com
Media Contact: Press@lendingclub.com
PYMNTS Contact: information@PYMNTS.com
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SOURCE LendingClub Corporation