Economy

This Is Why Americans Feel Poor

Douglas A. McIntyre

Published: July 7, 2024 7:14 am

According to a new study from MarketWatch, 49% of Americans say they are “broke.” Two-thirds say they are living “paycheck to paycheck.” However, the CPI topped 8% in 2022 and has recently dropped to just above 3%. Inflation may not have disappeared, but it has been beaten down considerably.

Fast food inflation has driven McDonald’s and its competition to offer $5 meals to attract people back to its locations. The FT reports that more and more large, consumer-driven companies are offering price reduction coupons. Some people, however, think inflation is over.

Perhaps most importantly, the two most expensive things consumers buy are cars and homes.

The average rate on a 30-year fixed mortgage was under 3% in 2021. Today, it is just short of 7%. Those who cannot buy homes have to rent. Rents have risen 30% between 2019 and 2023. StreetEasy reports that it is more than wage increases. Housing prices are usually about a third of total gross income and are much higher in some cities and states.

Many people consider a car, SUV, or light truck their second-most expensive purchase. The days of 0% financing APR for 72 months are largely gone, as many car companies do not need incentives to attract customers. According to Chase data, new loans have risen to over 7%. For used cars, the number is higher. Car prices have increased from an average of $37,000 in 2019 to $47,000 last year.

Finally, most people use credit cards to make most of their purchases, and the rates for those can be over 20%.

People don’t just feel poor. In some cases, even among the middle class, they are.