Americans who earn $150,000 worry about inflation and layoffs

Americans who earn comfortably in the six-figure salary range are increasingly worried about how they will make ends meet this year, to the point that they are more panicked than employees who earn between $40,000 and $99,999.

That’s according to a report from the Federal Reserve Bank of Philadelphia that interviewed about 5,000 people for its Survey on Work, Income, Finance and Expectations (LIFE) released this month.

The survey found that 32.5% of people making $150,000 or more are worried about paying their bills in the six months following their responses, and 30.8% of people making between $100,000 and $149,999 say the same.

However, those earning between $40,000 and $99,999 were much less worried, with an average of 26.4% saying they were worried about their finances in the immediate future.

Those at the lowest end of the income scale (earning less than $40,000) were the most worried about how they would fare financially in the next half year. Four in 10 people said making ends meet in the next six months was a concern, though this figure has declined from previous iterations of the survey: in January, about 43% expressed concern, and in October 2023 the figure stood at 43.2%.

The opposite is true for the wealthier end of the spectrum, who become increasingly worried as time goes on. Take the $150,000+ group, for example, of which only 20.4% said in July of last year that they were worried about their immediate monetary situation.

That has increased in all LIFE surveys since: 24.3% in October 2023 and 29.6% in January 2024.

Responses from across the spectrum give insight into how different demographic groups are responding to a wealth of economic data. On the one hand, inflation is falling, from 9.1% to 3.3% from its peak in June 2022. That said, prices continue to rise, but simply at a slower pace and new factors are now influencing the inflation as well. market.

This ranges from rising global geopolitical tensions to a looming presidential election and a growing national debt bill.

Cut spending

Those earning more than $150,000 have also acted on their fears. Federal Reserve data showed that about 17% of those in the top group had cut essential spending, while 37.1% added that they had cut discretionary spending over the past 12 months.

This was by far the wealthy’s preferred method of reducing their spending, with 15% saying they had taken on extra work and 10% saying they had borrowed from more formal sources.

In fact, cutting discretionary spending was, perhaps unsurprisingly, the preferred method across all income groups, although those with less discretionary income were more likely to do so (e.g., 46.6% of earners $40,000 or less were using this coping strategy).

What worries the rich so much?

As the saying goes: “more money, more problems.” When presented with seven points of concern by the Philadelphia Fed, those making $150,000 or more were more worried than anyone else across the income spectrum, except for one point: transportation.

However, about four in 10 people who earn more than $150,000 said they were worried about finding and keeping child care, finding and keeping elder or senior care, getting laid off, or having their employer go bankrupt.

Likewise, about 37% said they were worried about another shutdown affecting their employer, and 35% were worried about being exposed to an illness at work.

In each of these scenarios, the fear factor decreased greatly the further down the income scale the respondent was, except for a spike at the bottom of the scale in the under $40,000 category.

Those on the lower end of the income spectrum have also been more consistent in their concerns about the economy. When comparing current outlooks to those from the same question last year, 30.5% of respondents said they felt more positive, while 34.6% said they felt more negative.

The outlook is only marginally better on the next rung, with those in the $40,000 to $69,000 range seeing a brighter outlook of just 4% compared to a year ago.

At the wealthier end of the scale there is a more dramatic shift: 55% of higher earners feel more positive than they did a year ago versus 18% who feel more negative, leading to an overall increase in outlook. of 37%.

That said, consumer sentiment, particularly in relation to higher prices, has remained fairly consistent over the past year. The latest consumer confidence index from the University of Michigan reached 65.6 in June.

Joanne Hsu, director of consumer surveys, added: “Consumer sentiment barely changed in June; This month’s reading was statistically insignificant, 3.5 index points below May and within the margin of error.

“Sentiment is currently around 31% above the low seen in June 2022 amid escalating inflation. Assessments of personal finances fell, due to modest increases in concerns about high prices as well as weakening incomes. “In general, consumers perceive little change in the economy since May.”

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