Authored by Mike Shedlock via MIshTalk.com,
More consumers of all income brackets reported living paycheck to paycheck in July 2023 than last year. Spending shows why...
Real Personal Consumption Expenditures (PCE) and Disposable Personal Income (DPI) from the BEA, chart by Mish. Disposable means after taxes.
Personal Current Transfer payments (PCTR) primarily includes Social Security, Medicare, Medicaid, and Food Stamps.
Please consider the LendingClub New Reality Check: Paycheck-To-Paycheck report for July 2023.
A notable 29% of Gen Z consumers living paycheck to paycheck cite nonessential spending as one of the factors contributing to their financial distress, with 15% citing it as the top factor, marking them the most affected demographic. In contrast, only 12% of baby boomers and seniors in similar financial situations attribute nonessential spending as a factor for their struggles. The likelihood of citing nonessential spending as a reason for living paycheck to paycheck decreases with age, making younger consumers more vulnerable to its adverse effects. The study also finds that male consumers are slightly more likely than female consumers to attribute their financial strain to nonessential spending.
Shoppers who say they engage in indulgent spending are also more likely to say they made payments related to credit cards, personal loans and buy now, pay later plans in the 30 days prior to the survey. Overall, credit product usage is 11 percentage points higher for consumers who cite indulgent spending than those who do not cite such spending. Higher credit usage among indulgent spenders suggests that credit usage on nonessential categories, such as clothing or travel, is more common than on essentials, such as groceries or household supplies.
Also consider the CNBC|Momentive Your Money Financial Confidence Survey.
The above chart shows nominal numbers. Inflation-adjusted, spending rose 0.6 percent in July and 0.4 percent in June as the lead chart shows.
Consumers has gone on a huge spending spree in the last two months.
For more details, please see Consumers Go on a Spending Spree in July, but Income Doesn’t Match
In response, a reader commented “I think the consumer is much more robust than most of these comments suggest. Especially millennials. Their incomes are way up, they’re spending & they’re savings are up. All is well.“
What a hoot
By the way, if 61 percent live paycheck to paycheck but only 21 percent struggle, the rest are one unexpected expense or loss of income away from somewhere between struggling and outright disaster.
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