If you’re having trouble making ends meet… you’re not alone. In fact, the Fed Reserve now says the average American has exhausted their pandemic savings. The savings people accumulated during the pandemic, which at one point topped $2 trillion, are due to run out this quarter, the Federal Reserve Bank of San Francisco said in a study released Wednesday (Aug. 16).
As reported in the website PYMNTS in May, 27% of households say they’ve used their savings to cover credit card debt alone, while a record number of 401(k) plan holders dipped into those accounts to cover costs last year. “More recently, savings don’t even cover credit card debts for many paycheck-to-paycheck consumers, as those with issues paying their bills carry average balances comprising 157% of their available savings,” PYMNTS wrote.
It’s a situation that isn’t likely to improve in the coming months. Upwards of 60% of Americans now live paycheck to paycheck as reported in June, a trend that Amber Carroll, senior vice president of membership and lifecycle strategy at LendingClub, said will stick around. This harsh economic climate has led to a decline in consumer purchasing power across income brackets, with more households opting to spend more on essentials than on non-essential goods. Caroll said it’s a choice that does little to improve their savings.
Are You Shelling Out an Extra $717 a Month?
The average American is now shelling out an extra $717 a month because we are still living in the results of the hottest inflation in decades, according to a new analysis from the Joint Economic Committee Republicans. The inflationary squeeze stems from the continuing costs of a number of everyday goods, including cars, rent, food, and health care. While the rapid pace of price increases eased slightly in the last year, the consumer price index still climbed 8.5% from the previous year. In other words…the damage is done. The Labor Department reported that the price index is hovering near a painful four-decade high.
“High inflation of the past 2+ years has done lots of economic damage,” Mark Zandi, chief economist at Moody’s Analytics, wrote in a post on X, the platform formerly known as Twitter. Looking at just the last year, Zandi calculates that the typical household spent $202 more this July than they did a year ago to buy the same goods and services. That’s significant, but it’s still below the peak of $536 for this year-over-year metric — a record hit back in June 2022, when gas prices spiked above $5 a gallon for the first time.
Factoring Broker: A Recession-Proof Home Business
What we now refer to as “Bidenomics” is fast creating modern versions of “Hoovervilles.” But if there is some good news, it’s that the business of factoring and alternative commercial finance is not only good, it’s booming. Business owners are just like anyone else. They are out of cash, and banks simply aren’t lending. More and more small to mid-size B2B business owners will be seeking out non-bank solutions to meet payroll and necessary operational expenses. It has been long known that the factoring business is recession-proof. For existing industry brokers, now is the time to double your networking and cold-calling efforts and begin building relationships with business owners. Lay that groundwork and let owners know that you’re available and a ready resource when the “Banks Say No!”
For those home business entrepreneurs still seeking a low-cost solution and a way to fight back against the ravages of Bidenomics, there may not be a better business to be in compared to factoring in as an IACFB Sponsored Agent.
