With inflation currently at over 8.5%, millions of American households are struggling to make their money go far enough. In fact, a survey by financial services company Primerica found that 75% of middle-income Americans – defined as those whose annual income sits between $30,000 and $100,000 – believe their earnings are falling behind the cost of living. Meanwhile, 77% believe the US will have entered a recession by the end of this year.
And for over a third of American families, the situation is even bleaker. According to a report in The Russell Sage Foundation Journal of the Social Sciences (RSF), over a third (35%) of families who work full-time aren't earning enough to afford basic necessities such as food, housing, medical care, transportation, and household expenses. The data compiled for the report was taken from 2015 to 2019, and the researchers have acknowledged this percentage has likely increased as a result of the pandemic and recent cost of living crisis.
By December 2021, Americans had put away more than $2.7 trillion in excess savings as their expenses plummeted during the pandemic. But the extra cushion wouldn't last long. By May this year, total savings had fallen to $2.5 trillion, with the bottom 20% of earners being the only demographic that wasn't forced to dip into their spare cash in the first few months of 2022.
That's because workers in traditionally lower-paid roles such as hospitality and retail were suddenly in high demand after the Great Resignation left many sectors struggling to attract talent. Subsequent research from the New York Life's Wealth Watch Survey has found the average American has had to withdraw $616.73 from savings to stay on top of inflation.
In January this year the child poverty rate hit 17%, the highest level since the end of 2020. That means approximately 12.6 million children were living below the poverty line, which is $27,479 for a family of two adults and two under-18s, according to the Census Bureau. Last December, the child poverty rate was 12.1% and the sudden rise has been attributed to the ending of increased Child Tax Credit payments. Throughout the pandemic, these payments were raised from $2,000 to $3,000-$3,600 per child but have now returned to pre-pandemic levels.
Factors including the pandemic have plunged the country further into the red. As of September 2022, the US national debt has surpassed a whopping $30.8 trillion, having increased by over $3 trillion since the start of October last year (this photo was taken that month). The debt, which almost doubled during the Obama years and skyrocketed under President Trump, now stands at over 124.39% of GDP, compared to just 59% in 2000.
Only a handful of countries, among them Greece and Japan, have a higher debt-to-GDP ratio. Astonishingly, today's US national debt breaks down to over $92,000 per person, or over $245,000 per taxpayer.
Household debt has also hit record highs. During the fourth quarter of 2020, it soared to $14.6 trillion, up $414 billion from the same period in 2019. The main driver has been the turbulent housing market. Historically low interest rates and other factors such as the pandemic-related exodus from the inner cities to the suburbs have led to an unprecedented increase in mortgage debt, which has exceeded $10 trillion for the first time ever.
According to the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the average salary for CEOs at S&P 500 companies has rocketed by 18.2% over the last year. That's double the current US inflation rate, while workers' earnings are falling. The study found that the average CEO-to-worker pay ratio is now 324:1, significantly higher than the 264:1 ratio recorded in 2019. And research by Zippia suggests that almost 70% of American CEOs are men.
The pandemic prompted many Americans to re-evaluate their retirement plans. The latest National Institute on Retirement Security report has revealed that 33% of US adults are rethinking their golden years due to COVID, while 18% have already changed the date they intend to stop working. More than half of all respondents worry the pandemic has impacted their ability to enjoy a secure retirement.
A study conducted in 2019 by CompareCards.com showed that 70% of Americans have cried over money at one time or another. Household debt was the number one cause of upset, followed by credit card debt and unemployment. Generation-wise, millennials are most prone to shedding tears over money.
Many Americans spent big bucks on their friends and family during the holiday season. Research by NerdWallet suggested the average person spent a record-breaking $762 on gifts last year, yet more than 35 million people were still paying off their holiday debt from 2020. With shipping delays and shortages meaning that many shoppers had to pay more to get the products they wanted in time for Christmas, this number could easily increase this year.
The cost of healthcare in the US has spiraled out of control. Almost 140 million adults in the country complain of medical financial hardship each year, while a survey released by Bankrate at the beginning of the pandemic found that 22% of Americans denied themselves medical care between March 2019 and March 2020 because of the cost.
Another 2020 study revealed that half of Americans worry a major health event in their household could result in bankruptcy, up from 45% in 2019. Their fears are well founded given that medical debt is the leading cause of personal bankruptcy in the US. An academic study published in 2019 discovered that just under 67% of bankruptcies were linked to the high cost of healthcare and time off work due to illness.
Shockingly, almost 13 million Americans have lost a friend or family member because they couldn't afford medical care. A survey from Gallup and West Health revealed the tragic outcome of rising healthcare costs, as the price of prescription drugs and medications continue to climb.
Can't find an affordable new home in your area? According to Moody's Analytics, homes in a staggering 97% of cities are now overvalued, with house prices in the most overvalued city – Boise, Idaho – sitting at 73% above market value. To make matters worse, rising mortgage rates are adding thousands of dollars to the yearly cost of homeownership, meaning millions of Americans are being priced out of the property ladder.
Parents of children under five pay an average of $10,000 a year for childcare, according to the US Treasury Department. In 22 states including New York, Illinois, and Oregon, that figure has now ballooned to a staggering $20,000. In fact, today's parents are paying 70% more for childcare than they would have done in 1985 – and most of this inflation occurred after 2000. Child Care Aware of America found that the cost of childcare has increased twice as fast as the median household income over the last two decades, leaving many families struggling to pick up the bill.
Thanks to the skyrocketing cost of childcare and household essentials, raising a child is more expensive than ever. But the bills don't just start once a baby has been born. According to the Kaiser Family Foundation, giving birth in the US now costs $3,000 – even if the mother has health insurance. This means parents all over the country are being left out of pocket, so it's no surprise that nearly three out of five childless millennials cite the cost of living crisis as their main reason for not having babies.
Bankrate reported in February that a massive chunk of the US population – 22% of Americans to be exact – has more credit card debt than emergency savings. On a positive note, the figure has actually fallen from 27% at the same time last year and is the lowest figure since the onset of the pandemic. That just goes to show that those who can have been saving hard.
In June 2021, a study from the Federal Reserve Bank of New York found that a whopping 1 in 20 households don't use bank accounts to manage their money. Described as "unbanked," these households are generally paid in cash, meaning they have no access to debit cards, saving schemes, or ATMs. In Louisiana, 15% of the population is currently unbanked, while Mississippi has the highest number of unbanked individuals with 16% of the population managing their money alone.
Though it may seem difficult to believe in this day and age, 10% of adults in the US are "credit invisible," meaning 26 million have no credit history to speak of. Among Black and Latino Americans the share rises to 15%. No credit is better than bad credit, but borrowers will still struggle to get approval for a mortgage, loan, credit card, and other financial products, and may end up paying punishing interest rates.
The US has more millionaires than any other country and tops the global rankings for billionaires as well, with over 700 calling America home. On the flipside, 11.4% of Americans are living in poverty.
The top 1% positively hog the country's wealth. They own 31.2% of all net worth in America. In contrast, the bottom 50% together hold just 1.4%. The disparity has grown over the past few decades and shows no signs of narrowing as the rich in the country continue to get richer, while the poor get poorer.
The rate of poverty among Black Americans is more than double that of white Americans, and the typical Black family has just a 10th of the wealth of the typical white family. According to Politico, this gaping racial wealth gap "has grown into a yawning chasm" during the pandemic and closing it is one of the biggest challenges the Biden administration is facing.
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According to data collated by the Bureau of Labor Statistics, women in the country earned 18.3% less than men during the third quarter of 2020. Along with tackling the expanding racial wealth gap, President Biden is strongly committed to closing the gender pay gap, which remains stubbornly wide, and he fully supports the proposed Paycheck Fairness act, which will bolster the landmark 1963 Equal Pay Act.
The generational wealth divide in the US is extraordinarily wide as well, with younger Americans substantially worse off than their parents and grandparents, who are sitting on much of the nation's wealth. Millennials, for instance, are 10 times poorer than Baby Boomers and earn a fifth less at the same stage of life.
Social Security alone typically replaces just 40% of pre-retirement income, yet 40% of seniors in the US rely solely on this provision, which means millions of older Americans endure a cash-strapped later life. The research from the National Institute on Retirement Security has also found that just 7% of seniors have the perfect retirement combo of income from Social Security, a defined benefit pension, and a defined contribution account, while Magnify Money has found that 46% of people expect to enter retirement in debt.
And it's not just the poor who have gotten poorer over the past few decades. The middle class has become increasingly squeezed too. The median wealth of upper-income families is now 6.6 times higher than that of middle-income families. A decade ago, upper-income families held 6.2 times more wealth.
The idea that anybody in the US could go to sleep hungry in the 21st century seems preposterous, but a Nonfiction Research report published in 2018 entitled The Secret Financial Lives of Americans found that 37% of people in the country have admitted to going to bed with a rumbling stomach because they couldn't afford to eat.
The same report, which surveyed a total of 2,238 people, asked whether respondents had ever stolen something they couldn't afford, and 12% of respondents answered that they had. Perhaps this isn't surprising if you consider that one in eight American adults surveyed by the US Census Bureau in October 2020 reported that they didn't have enough food in the past week. Incidentally, the pandemic has triggered a spike in shoplifting as desperate Americans turn to crime to make ends meet and feed their families.
The US ranks a not-too-shabby 14th in the world for financial literacy, ahead of Switzerland and Japan, but many Americans harbor misconceptions about money and actually know less than they think they do about their finances. As many as 96% of those who took part in a financial literacy survey for LendingTree in 2021 believe at least one money myth. For example, 45% of respondents believed that carrying a credit card balance helps your credit score.
America may be one of the least corrupt nations in the world – the US ranks 25th out of 180 countries and territories that make up Transparency International's Corruption Perception Index – yet the underground economy, which basically encompasses any activity that evades tax from illicit drug dealing to cash-in-hand work, represented as much as 12% of US GDP in early 2020.
CreditCards.com surveyed 2,500 coupled-up Americans last year to find out their views on so-called financial infidelity and discovered that 44% have hidden money secrets from their partner, with many stashing cash away on the down-low, signing up for a secret credit card, or concealing debts they've racked up.
A surprising 68% of Americans haven't got around to writing a last will and testament, according to the latest Estate Planning and Wills Study from Caring.com and YouGov. The number has plummeted by nearly 25% since 2017, with the main reasons being the perceived cost and lack of knowledge about how the process works.
In November 2021, President Biden increased the minimum wage for federal contractors from $7.25 to $15 per hour. Before the increase, the minimum wage hadn't changed since 2009, the longest it's been fixed since it was introduced in 1938. The $7.75 increase is good news for the hundreds of thousands of federal workers across America. However, if this figure had increased in line with productivity levels, it would be $26 – the equivalent of $50,000 a year. A CBS poll in September 2021 revealed that 70% of Americans agree that the federal minimum wage should be higher.
The rise of brokerage apps has made trading more accessible than ever. But being able to make investments at the touch of a button isn't necessarily good news. According to a survey by MagnifyMoney, 32% of American traders have made trades while drunk. This figure rises to a staggering 59% of Gen Z traders, while 9% of Baby Boomers admitted to trading under the influence.
According to a recent Federal Trade Commission (FTC) report, a whopping $1 billion was lost in cryptocurrency scams between January 2021 and March this year. The encrypted nature of cryptocurrencies such as Bitcoin makes it the ideal tool for cybercriminals, as they can request and send funds without being traced. Almost half of the people affected by crypto scams, the majority of whom are aged 25-40, claim they fell victim to a post on social media. The FTC has warned people to be wary of fake investment opportunities – a stark reminder in the wake of a crypto market crash.
Ever checked your bank statement only to find a subscription you completely forgot about? You're not alone. According to a survey commissioned by C&R Research, 42% of American consumers have paid for a subscription they didn't realize they had. Even more shockingly, 54% of respondents were underestimating how much they spent on subscriptions a month by at least $100 – and 24% underestimated their payments by at least $200.
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