Following an extended period of elevated inflation and increased interest rates, many Americans are struggling to make ends meet.
As of August, a LendingClub report reveals that 60% of adult Americans stated that they are living paycheck to paycheck, a figure that has remained unchanged since last year.
Recent data paints a somewhat mixed picture of the current state of the economy. While there have been signs of a slight decrease in inflation, the consumer price index, which tracks the costs of a wide range of goods and services, remains 3.7% higher than it was a year ago, as reported by the U.S. Bureau of Labor Statistics in its August update.
These rising prices have had a negative impact on workers' incomes. According to a separate release from the U.S. Department of Labor, real average hourly earnings declined by 0.5% in the same month.
Due to the inability of wage growth to keep up with the cost of living, many households are finding it increasingly difficult to meet their financial obligations.
LendingClub's money expert, Alia Dudum, noted, "The data highlights the widespread financial challenges affecting a majority of consumers. The problem is that there is more month left at the end of the money."
Although the Federal Reserve recently decided to keep interest rates steady at its latest policy meeting, Fed Chair Jerome Powell indicated that the central bank desires to see more progress in its battle against inflation, which leaves open the possibility of another interest rate hike later this year.
Central bank officials have already raised rates 11 times, resulting in the Fed's key interest rate being in the target range of 5.25% to 5.5%, the highest level in more than 22 years.
According to TD Bank's annual consumer spending index, inflation has affected the spending habits of four out of every five consumers.
Rising costs for housing, food, and child care, coupled with the burden of higher interest rates on credit card debt and auto loans, have put additional strain on household budgets, as stated by Sophia Bera Daigle, CEO and founder of Gen Y Planning, a financial planning firm based in Austin, Texas.
Bera Daigle, who is also a member of CNBC's Advisor Council, emphasized that monthly expenses are starting to take a toll.
Studies have shown that lower-income workers have been hit the hardest by surging prices, particularly in essential categories such as food, which represent a larger portion of their budgets.
Currently, LendingClub's findings indicate that 76% of individuals earning less than $50,000 annually and 62% of those earning between $50,000 and $100,000 were still living paycheck to paycheck in July, with little change from the previous year. Among those earning $100,000 or more, only 45% reported living paycheck to paycheck.
70% of Americans are feeling financial stress, according to a separate CNBC Your Money Financial Confidence Survey conducted in March. This stress is largely attributed to inflation, rising interest rates, and a lack of savings.
Furthermore, only 45% of adults reported having an emergency fund, and among those who do have one, approximately 26% indicated that they have saved less than $5,000."
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