60% of Americans live paycheck to paycheck heading into 2022 holiday

Will holiday shopping pick up or go cold? Here are both sides of the issue

Just as the holiday shopping season gets into full swing, families are finding less slack in their budgets than before.

As of October, 60% of Americans were living paycheck to paycheck, according to a recent LendingClub report. A year ago, the number of adults who felt stretched too thin was closer to 56%.

“More consumers who have historically managed their budgets comfortably are feeling the financial strain, which will impact their spending behavior as we head into the holiday shopping season,” said Anuj Nayar, LendingClub’s financial health officer.

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Not only are day-to-day expenses higher, but inflation has also caused real wages to decline.

Real average hourly earnings are down 3% from a year earlier, according to the latest reading from the U.S. Bureau of Labor Statistics.

A separate report by Salary Finance found that two-thirds of working adults said they are worse off financially than they were a year ago.

Already, credit card balances are surging, up 15% in the most recent quarter, the largest annual jump in more than 20 years.

People are trying to economize and make the most of what they have.

Cecilia Seiden

vice president of TransUnion’s retail business

Roughly half of shoppers said they will buy fewer things due to higher prices, and more than one-third said they will rely on coupons or other money-saving strategies, according to a separate survey by RetailMeNot.

More consumers also plan to finance their purchases this year with credit cards and buy now, pay later loans.

And 25% of shoppers said they would opt for cheaper versions or more practical gifts, such as gas cards, according to another holiday survey by TransUnion.

“People are trying to economize and make the most of what they have,” said Cecilia Seiden, vice president of TransUnion’s retail business.

Holiday debt ‘is easy to get into and hard to get out of’

Shoppers at the King of Prussia mall in King of Prussia, Pennsylvania, on Saturday, Dec. 4, 2021.

Hannah Beier | Bloomberg | Getty Images

Katheleen Knopf

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