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37m ago

One in Four U.S. Households Now Live Paycheck to Paycheck, Bank of America Finds

New data points to a K-shaped economy that is putting the heaviest strain on lower-income families.

A recent survey found that 24% of households spend over 95% of their income on necessities, leaving little to no money for the “nice-to-have” things.
A shopper pays for produce at a farmer's market in San Francisco on March 27.
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Overview

  • Bank of America Institute estimates roughly 24% of households are spending more than 95% of income on essentials such as housing, groceries, gas, child care and utilities.
  • The institute defines paycheck-to-paycheck status by outlays exceeding 95% of income on necessities using internal transaction data rather than survey responses.
  • Nearly 30% of lower-income households meet this threshold, up from 27% in 2023, while high-income households have seen far fewer budget pressures.
  • Wage growth has diverged, with after-tax income up about 1% for lower-income consumers, 2% for middle earners and 4% for high-income households, widening affordability gaps.
  • Stress signals are mounting, including a record 6.65% share of subprime auto loans 60 days past due in October and a Goldman Sachs estimate of a 20%–25% chance of a notable unemployment uptick in the next six months.