Americans earning $150,000 worry about inflation and layoffs

That’s according to a report from the Federal Reserve Bank of Philadelphia, which surveyed about 5,000 people in its Work, Income, Finances, and Expectations (LIFE) survey, released this month.

The survey found that 32.5% of people earning $150,000 or more worry about paying their bills within six months of their responses, and 30.8% of people earning between $100,000 and $149,999 say the same thing.

However, those earning between $40,000 and $99,999 are much less concerned, with an average of 26.4% saying they are concerned about their finances in the immediate future.

Those at the bottom of the income scale – earning less than $40,000 – were most concerned about how they would fare financially over the next six months. Four in 10 people said making ends meet over the next six months was a concern, although that figure declined from previous editions of the survey: in January, about 43% expressed concerns, and in October 2023, this figure stood at 43.2%.

The opposite is true for the richest, who are becoming more and more concerned over time. Take for example the $150,000 and above bracket, of which only 20.4% said in July last year that they were worried about their immediate financial situation.

Since then, this has increased with each LIFE survey: 24.3% in October 2023 and 29.6% in January 2024.

Responses across the board provide insight into how different demographics respond to a wealth of economic data. On the one hand, inflation is falling, falling from 9.1% to 3.3% since its peak in June 2022. That said, prices continue to rise, but just at a slower pace, new factors now also influencing the market.

These range from growing global geopolitical tensions to an impending presidential election to an ever-increasing national debt bill.

Decrease spending

Those earning more than $150,000 have also acted on their fears. Fed data shows that about 17% of those in the top bracket have cut back on essential spending, while 37.1% added that they have cut back on discretionary spending in the past 12 months.

This was by far the wealthy’s preferred method of cutting expenses, as 15% said they took on additional employment and 10% said they borrowed from more formal sources.

Indeed, reducing discretionary spending was – unsurprisingly – the preferred method across all income groups, although people with lower discretionary income were more likely to do so (e.g., 46.6% of those earning $40,000 or less used this coping strategy).

What worries the rich so much?

As the saying goes: “More money, more problems”. When the Philadelphia Fed presented them with seven areas of concern, those earning $150,000 or more were more worried than anyone else on the income scale, except for one area: transportation.

However, about four in 10 people earning more than $150,000 said they were worried about finding and keeping child care, finding and keeping senior or elderly care, being dismissed or see their employer go bankrupt.

Similarly, about 37% said they were worried about another shutdown hitting their employer, and 35% were worried about being exposed to illness at work.

In each of these scenarios, the fear factor declined largely as the respondent moved down the income scale, with the exception of a slight increase at the end of the scale in the under-income category. $40,000.

Those at the lower end of the income scale also expressed more consistent concerns about the economy. Comparing the current outlook compared to the same question from the previous year, 30.5% of respondents said they felt more positive while 34.6% said they felt more negative.

The outlook is only slightly better going forward, with investors in the $40,000-$69,000 range showing a more optimistic outlook of only 4% compared to a year ago.

At the wealthier end of the scale, the turnaround is more dramatic, with 55% of high earners feeling more positive than a year ago, compared to 18% who feel more negative, representing an overall increase in outlook of 37%.

That being said, consumer confidence, particularly in the face of rising prices, has remained fairly constant over the past year. The latest consumer confidence index from the University of Michigan reached 65.6 in June.

Joanne Hsu, director of consumer surveys, added: “Consumer sentiment was little changed in June; This month’s reading was statistically insignificant, 3.5 index points below May and within the margin of error.

“Sentiment is currently around 31% above the low seen in June 2022 amid escalating inflation. Personal finance ratings fell, driven by slightly growing concerns about rising prices as well as weakening incomes. Overall, consumers perceive little change in the economy since May.

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