More and more Americans are saying they can’t pay their bills. Here are the states where it’s worst.
- March 17, 2023
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A growing number of Americans say they are struggling to pay their bills as they are hit by inflation and the loss of federal pandemic aid.
About 36% of consumers say they have had “somewhat” to “very difficult” paying their usual bills in the past seven days, according to the Census Bureau’s latest Household Pulse Survey, which collected responses in the first two weeks February. That represents a 25% year-on-year increase and is higher than even in the early months of the pandemic, when households were shored up by expanded unemployment benefits and stimulus checks.
The health of American consumers is key to the US economy, which relies on consumer spending for 70 cents of every US dollar in economic activity. But there are growing signs that more households are reaching a breaking point, weighed down by food prices that have risen 20% in two years and rents that have risen 13%.
Consumers are cutting back by switching to cheaper store brands and even buying less groceries, GlobalData chief executive Neil Saunders said in a research note, citing his company’s survey of about 2,800 Americans.
“[I]Inflation is not an enemy that consumers can withstand indefinitely,” he noted.
At the same time, there is a dichotomy in the economy: the labor market remains strong and employers continue to hire. But even though more Americans have jobs than in the early days of the pandemic, their incomes are not keeping pace with inflation — eroding their standard of living, experts point out.
“Since April 2021, real earnings have been negative every month,” noted Evan Lorenz, deputy editor of Grant’s Interest Rate Observer. “The money they bring home every week doesn’t go far enough.”
Some Americans are struggling more than others, with many southern states reporting a greater proportion of hardship, census data shows. Incomes tend to be lower in these regions, and many workers still earn the federal minimum wage of $7.25 an hour — an hourly rate that hasn’t changed since 2009.
Mississippi has the highest percentage of Americans struggling to pay their bills — more than half of its residents report difficulty meeting their typical responsibilities, census data shows. Other states with higher than average proportions of households in need are Alabama, Louisiana and West Virginia.
The median household income in Mississippi is $46,637, according to the Federal Reserve Bank of St. Louis, well below the US average of $70,784. Meanwhile, Minnesota, the state with the lowest percentage of residents struggling to pay their bills, has a median household income of $80,441.
“I am overwhelmed”
Not surprisingly, Americans earning less than $25,000 are struggling the most, with about 64% saying they have recently had trouble paying their most recent bills, according to the census report. And people receiving food stamps, who typically live in low-income households, are reporting an increase in financial distress, according to Stacy Taylor, head of policy and partnerships at Propel.
Food stamp recipients report problems like, “My credit cards are exhausted, I can’t find the job I need, my rent is overdue, and I’m at my limit,” Taylor said in the company’s February survey of its users.
She added, “All we hear is ‘I’m overwhelmed’.”
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Even some higher-income Americans say they’re encountering problems. Nearly 1 in 10 people making over $200,000 a year said they have some or major difficulty paying their bills, according to census data.
While this reflects a far smaller proportion than lower-income Americans who say they are struggling, it could suggest that even wealthier households are struggling to maintain their standard of living with recent economic trends. New cars, for example, are 19% more expensive than two years ago, and a record percentage of Americans are paying more than $1,000 in monthly car payments.
“The cost of living in America – you need a roof over your head and a car to get to work – is increasing much faster than income,” Lorenz said.