According to a new survey by the Federal Reserve Bank of Philadelphia, approximately one-third of six-figure income earners in the United States are worried about being able to pay their bills.
The survey found that over the past year, consumers with annual incomes of $100,000 or more have seen a significant increase in concerns about not being able to achieve a balanced budget in the next 12 months. A considerable portion of wealthier Americans are coping with financial pressure by cutting back on expenses, including reducing dining out and entertainment activities.
The survey results clearly indicate that persistent economic pressures have been brought on consumers by years of high inflation and high borrowing costs, impacting even those in higher income brackets.
Conducted by the Federal Reserve Bank of Philadelphia from March 22 to April 6, the survey revealed that among consumers with incomes between $100,000 and $150,000, nearly one-third (30.8%) are worried about achieving a balanced budget in the next six months, a significant increase from 21.3% a year ago.
Similarly, among Americans with incomes of $150,000 or more, 32.5% expressed concerns about bill payments, up from 21.7% a year ago.
Wealthier Americans are shown to be more worried than the 23% of the population with incomes between $70,000 and $90,000.
Overall, around one-third (34.9%) of consumers expressed concerns about balancing their budgets, up from 28.7% a year ago.
Younger Americans are more likely to feel economic pressures than older adults. Among those aged 18 to 35, 41% are worried about budget balance, compared to only 22% of those aged 65 and above.
Even high-income consumers are feeling a slight unease about the sustainability of paying their bills long-term, with the number of such individuals significantly increasing.
For instance, among those with incomes between $100,000 and $150,000, 32.3% expressed concern about maintaining a balanced budget in the next 7 to 12 months, higher than last year’s 26.5%. In the $150,000 and above income bracket, this proportion increased even more, with 33% expressing concerns about budget balance, up from 19.8% last year.
The survey found that in the past year, there has been a “significant” increase in the number of people who are currently able to pay their bills but are worried about not being able to do so in the next six months. This proportion rose from 20.7% a year ago to 26.2%.
On the brighter side, more higher-income consumers are expecting their incomes to increase this year, with 40.8% of those earning $150,000 or more anticipating an increase, higher than 20% from last year. Consumers mentioned feeling more optimistic than a year ago, possibly explaining why Americans continue to spend heavily on traveling.
The Transportation Security Administration screened a record high of 2.99 million people at airports last Sunday, gearing up for a record-breaking summer travel season peaking during the July 4th holiday. It is expected that between June 27 and July 8, over 32 million people will be screened, a 5.4% increase from last year.
However, in response to financial pressures, 43.1% of consumers indicated they are cutting back on discretionary spending such as entertainment activities and dining out. Among those earning over $150,000, over a third (37.1%) are doing the same.
Some consumers have even cut back on essential expenses such as food or healthcare, with 23.5% of Americans saying they are doing so, with the proportion being 17.1% for higher-income earners.
To cope with the high cost of living, many people are taking on part-time work, borrowing more money, and withdrawing funds early from retirement savings.