Paycheck-to-paycheck nation: 1 in 4 US households struggling to stay afloat

Core Insights - A significant portion of American households are living paycheck to paycheck, with 24% projected to be in this situation by 2025, indicating a struggle to cover basic necessities without savings [1][10][12] - The financial divide between lower-income and higher-income households is widening, with nearly a quarter of households spending over 95% of their income on essentials [2][3] - Stagnant wages are exacerbating financial struggles, particularly for middle and lower-income households, while high-income households are experiencing wage growth that outpaces inflation [3][4] Financial Divide - The report highlights that lower-income households are facing stagnant wages, with only a 1% increase year-over-year, while middle-income households saw a 2% increase, both below the 3% inflation rate [3][4] - In contrast, high-income households enjoyed a 4% increase in wages, allowing them to stay ahead of rising costs [3][4] - Low-income Millennials are particularly affected, with wage growth of only 1% compared to 6% for their high-income peers [3] Consumer Debt and Economic Impact - The affordability crisis is reflected in rising consumer debt, with 6.65% of subprime borrowers at least 60 days late on car payments, the highest level since the early 1990s [7][12] - Many households are making only minimum payments on credit cards, indicating increasing financial strain [7][12] - Economists warn that the financial pressures on households could lead to cautious spending, potentially weakening the consumer-driven economy [8][12] Labor Market Concerns - Goldman Sachs economists estimate a 20% to 25% chance of a 0.5 percentage point increase in US unemployment in the next six months, signaling a potential slowdown in the labor market [9][12]