No one is immune to economic downturn. Even high-income earners are feeling budgetary constraints tighten as inflation persists.
More than half of high earners report cutting back on discretionary retail shopping and non-essential grocery spending. And almost one third are eating out less — at roughly the same rate as those in other income brackets.
With a higher baseline income, this demographic tends to curb spending in categories rather than cutting budget items out completely. But in this economic environment, it’s clear that even higher earners are not immune to budgetary considerations.
In the wake of rising costs, even six-figure incomes are proving to be insufficient for many.
In 2023, there has been a noticeable uptick in these earners adopting a paycheck-to-paycheck lifestyle. In fact, with a 4% increase marked between January and March, this growth rate among Americans earning $100,000 or more exceeds that of other demographics.
One might assume these highly-paid workers would be cushioned from economic volatility. However, the increasing number of those joining the paycheck-to-paycheck club tells a different tale. The squeeze, it seems, is being felt across all income tiers, suggesting no one is immune to the rising costs.
As high-income earners aim to curb spending, they’re following the lead of many others by making a significant spending shift toward discount outlets.
Retailers like Walmart (WMT), Big Lots (BIG), and even dollar stores are enjoying an uptick in high-income patrons as value-for-money becomes an important consideration across all demographics. Even big spenders’ restaurant bills have been tempered, with many opting to order more affordable menu items when dining out.
While it’s clear the economic climate is leading to shifts in spending habits across all income brackets, it’s important to remember these changes signify adaptation, not defeat. This data serves as a reminder that we all can — and must — look for ways to navigate the ebbs and flows of the financial tide.
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