By Michael Snyder
We have reached a point where nearly two-thirds of all Americans are living paycheck to paycheck. So what happens if millions of those people suddenly lose their paychecks during the severe economic downturn that is ahead of us? In 2008, unprecedented numbers of Americans found themselves unable to pay their mortgages when the recession struck, and foreclosures surged to absolutely shocking levels. Unfortunately, we have set ourselves up for the same thing to happen again. Most Americans are literally teetering on the brink of financial disaster, and it won’t take much to push them over the edge.
According to a survey that was just released, 63 percent of Americans were living paycheck to paycheck in September…
As rising prices continue to outpace wage gains, families are finding less cushion in their monthly budget.
As of September, 63% of Americans were living paycheck to paycheck, according to a recent LendingClub report — near the 64% historic high hit in March. A year ago, the number of adults who felt strained was closer to 57%.
Why aren’t more people alarmed by the fact that nearly two-thirds of the entire country is just barely scraping by from month to month?
If you do not have anything to fall back on, you are just one major setback away from extreme financial distress.
A job loss, an auto accident or a serious illness could hit at any time. If you suddenly experienced such a tragedy, how would you make ends meet?
A different survey that was recently conducted found that two-thirds of all working adults in the United States believe that they are “worse off financially” than they were 12 months ago…
As inflation pressures continue, two-thirds of working adults said they are worse off financially than they were a year ago, according to a recent report by Salary Finance.
To make ends meet, many are dipping into their cash reserves or going into debt.
Nearly three-quarters, or 72%, of consumers have less in savings than last year, a jump from 55% who said the same in February, the report found. And 29% said they have wiped out their savings entirely. The report is based on a survey of 500 adults in August.
So most of us are living paycheck to paycheck, and most of us are also doing worse than we were in 2021.
Isn’t that just great?
If things are this bad already, what will these numbers look like six months from now?
We continue to get even more evidence that we are plunging into a very painful economic downturn. For example, on Tuesday we learned that U.S. business activity has now contracted for 4 months in a row…
U.S. business activity contracted for a fourth straight month in October, with manufacturers and services firms in a monthly survey of purchasing managers both reporting weaker client demand, the latest evidence of an economy softening in the face of high inflation and rising interest rates.
S&P Global said on Monday its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to 47.3 this month from a final reading of 49.5 in September.
And just like we witnessed in 2008, home prices are starting to crash at an alarming rate.
In fact, it appears that prices are going down particularly fast in the western portion of the nation…
The study was conducted by Ed Pinto—director of the American Enterprise Institute’s Housing Center. Pinto told Fortune that he predicts that the ‘damage’ will spread for the Northeast, with low and middle-markets being hit the worst.
It’s Northern California that leads the way, with San Jose experiencing a drop of 10.8 percent since September, followed by San Francisco at 8.5 percent, then it’s Seattle at 8.2 percent, Denver at 5.8 percent, San Diego 5.2 percent, Portland 5.1 percent, Las Vegas 4.8 percent and Phoenix at 4.4 percent.
Unfortunately, millions of Americans that purchased homes at or near the peak of the market could soon find themselves “underwater” on their mortgages.
Do you remember the last time such a thing happened?
It was a complete and utter nightmare. Countless homeowners ended up simply walking away from their mortgages, and that caused a giant mess for our financial institutions that took many years to finally sort out.
In so many ways, what we are going through right now is reminiscent of what we experienced in 2008 and 2009.
And just like we witnessed in 2008, most Americans are completely and utterly unprepared for what is ahead.
To me, that is quite strange, because at this point what is happening to the economy should be apparent to everyone.
We are enduring the worst inflation crisis in decades, the housing market is starting to come apart at the seams, and economic activity is slowing down all around us.
The state of the U.S. economy has become a top issue during this election season, and pessimism about the future seems to be permeating just about everything.
In fact, at this point Americans are even becoming more pessimistic about the long-term future of their children…
Americans have as little optimism as they have had at any time in nearly three decades about young people’s chances of having greater material success in life than their parents. In all, 42% of U.S. adults think it is very (13%) or somewhat (29%) likely that today’s youth “will have a better living standard, better homes, a better education and so on.” This marks an 18-percentage-point drop since June 2019 and is statistically tied with the previous low in 2011.
But even though there is so much pessimism in our society right now, most people are still not getting prepared for a full-blown meltdown of the system.
And that is because most of the population does not think that it is going to happen.
After everything that has transpired, most Americans still have a tremendous amount of faith in the fundamental soundness of our system.
Overall, there is still an overwhelming consensus that most of the severe problems that we are facing right now are just “temporary” and that things will “return to normal” eventually.
It would be wonderful if that assessment was true.
Sadly, our leaders have really messed things up this time, and we are all going to experience a tremendous amount of pain as a result.