In general when dealing with things that are changing, often there is a point at which the change becomes no longer sustainable. For instance if a landlord continues to raise the rent monthly on an apartment that is occupied by someone on a fixed income, at some point the occupant can no longer pay the rent on this apartment. When this occurs the occupant has reached his/her tipping point. The final increase does not need to be dramatic, but just enough to push the occupant of the apartment over the edge … off the cliff … into the abyss. (This example is not meant to imply that the increases were or were not necessary, but merely to point out that in many everyday situations there can be a tipping point.)
The following headline is from a CNBC article on 2/17/22:
“Despite rising wages, 61% of Americans are still living paycheck to paycheck, report finds”
“At the end of 2021, 61% of the U.S. population was living paycheck to paycheck, down slightly from a high of 65% in 2020, according to a recent LendingClub report.”
What this means is that almost 2/3 of Americans are not able to sustain a major disruption to their income stream or a major increase in their expenses. If either of these occurs a tipping point is reached. Note that this article was published back before the major spike in gas prices.
Inflation is costing families nearly $300 a month, according to a recent report by Moody’s Analytics, and look for this to continue to increase as gas prices continue to skyrocket … that is unless you are less than fifty and can walk or bike to work. So from my perspective, when is the tipping point going to be reached for the 61% of families that are living paycheck to paycheck? At what point will Biden’s 7% inflation and skyrocketing gas prices affect the health and well being of these families?
Again from the CNBC article: “Even among those earning six figures, 42% said they were living paycheck to paycheck, the survey of more than 3,000 adults found.”
Knowing that inflation and rising gas prices disproportionately affect those with lesser incomes, which income group will have its tipping point first? If you guessed that income group that does not own and cannot afford to buy an electric car, you would be spot on.
Thank you, JB!
3/21/22