More Americans living paycheck to paycheck than 5 years ago, Bank of America data shows

Published On Oct 28, 2024, 6:00 AM

A recent study by Bank of America reveals that the percentage of U.S. households living paycheck to paycheck has increased significantly since 2019, affecting all income levels. Currently, 26% of Americans are spending over 95% of their income on essential expenses, and nearly 30% are spending over 90%. This shift is attributed to rising costs of necessities, including housing and groceries, amidst ongoing inflationary pressures. The trend indicates financial strain across the board, including affluent households, suggesting broader economic challenges.

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Stock Forecasts

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Negative

The increase in financial stress among consumers may lead to decreased discretionary spending, negatively affecting retail sales and consumer goods sectors. Companies providing essentials may benefit, while those focused on non-essentials may struggle.

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Positive

The ongoing financial struggles of American households could lead to a rise in demand for debt solutions, which may positively impact companies in the financial services sector, especially debt consolidators and credit management firms.

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Negative

If financial strain persists, we might see a potential increase in mortgage defaults impacting financial institutions generally. This could negatively affect banks' stock prices, including Bank of America.

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