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Which city has the worst inflation problem?
Inflation increased in July, according to the Bureau of Labor Statistics. The consumer price index (CPI) rose 0.2% in July compared with last month, while it was up 2.7% from a year ago. LiveNOW's Andy Mac spoke about which cities have the biggest inflation problems with Chip Lupo from WalletHub.
New financial data reveals that more Americans are living paycheck to paycheck.
The study, released by Bank of America on Tuesday, defined households as living paycheck to paycheck if their necessity spending exceeded 95% of their income, meaning the majority of a household’s immediate earnings went toward basic necessities.
24% of households living paycheck to paycheck
By the numbers:
The data found that nearly a quarter of all households (24%) are estimated as living paycheck to paycheck this year.
While this is an increase in the number of households year-over-year living paycheck to paycheck (0.3 percentage points), Bank of America said the pace of growth is nearly three times lower than last year.
However, there has been little to no increase in the share of middle- or higher-income households living paycheck to paycheck. Why are we only seeing an increase in lower-income households? In our view, it’s likely due to slowing wage growth for this cohort. In fact, wages for lower-income earners have been easing relative to their higher-income counterparts since the beginning of 2025 (Exhibit 4), after having risen much faster in 2021-22, before cooling in 2023-24 and falling this year.
Reason for slower growth
Dig deeper:
The reason for the slowdown: Bank of America’s internal data shows that the rise in households living paycheck to paycheck is primarily driven by lower-income households.
In fact, 29% of lower-income households are living paycheck to paycheck, up from 28.6% in 2024 and 27.1% in 2023.
Meanwhile, there has been almost no increase in the number of higher- and middle-income households. In fact, the company found that higher-income Millennial households have seen their average wages grow five percentage points faster than the rate of lower-income households in the same generation. Meanwhile, higher-income Gen X have outpaced their lower-income counterparts by four percentage points. And higher-income Baby Boomers have seen wage gains, while their lower-income peers are seeing declines.
(File: fizkes / iStock / Getty Images Plus)
"Consequently, these higher-income cohorts are more able to absorb the recent reacceleration in inflation due to their outsized wage growth, while lower-income households’ wage growth has not kept pace," Bank of America wrote, noting it’s possible that "wealth effects" (higher levels of ownership for stocks, homes, etc.) could be buoying higher-income households as well.
Location matters
Local perspective:
According to the data, the southern census divisions (notably Delaware, DC, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia), and western divisions (especially Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming) have the highest share of households living paycheck to paycheck.
Meanwhile, the divisions with the lowest share are in the Northeast (particularly New Jersey, New York and Pennsylvania) and Midwest (namely Illinois, Indiana, Michigan, Ohio and Wisconsin).
However, an interesting dynamic has emerged in the last year. The 2025 share of households living paycheck to paycheck in the Northeast and Midwest census divisions increased compared to the previous year, while there has been a decrease in the share of households living paycheck to paycheck across most of the South and West.
What’s next for households living paycheck to paycheck
What's next:
Despite some relief for the South and West, Bank of America said accelerating year-over-year cost increases could renew financial pressures in these regions.
Inflation has started to accelerate compared to the previous year, especially in the Mountain division (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming).
"So, in our view, it is possible that these rising costs may renew or expand financial pressure on consumers in these areas after only a brief respite," the company reported.
How far your paycheck goes in major US cities
Big picture view:
Earlier this year, the consumer financial services company said they looked into data from the Bureau of Economic Analysis to determine how far average annual salaries go in the 25 largest U.S. metros.
"Moving from a high-cost area to a lower-cost city – or vice versa – may not always result in the expected increase in purchasing power," the company said on its website. "While workers in expensive cities tend to get paid higher wages on average, their pay effectively declines when adjusted for the area’s cost of living."
RELATED: Here’s how far your paycheck goes in America's major cities in 2025
"Similarly, workers in cheaper areas may make less, on average, but their pay effectively increases because they can buy more with their dollars," the company continued.
In San Francisco, for example, high living costs reduced buying power by over 15%. Workers in Los Angeles, Seattle, New York, and Miami also lost 10-13% of their wage’s value. Meanwhile, San Antonio, St. Louis, Charlotte, and Detroit saw increased buying power after cost-of-living adjustments.
The Source: For Bank of Amreica’s paycheck-to-paycheck analysis, they used a sample of households that appeared to have their primary banking relationship with Bank of America. In addition, the company looked at households who reside in the United States and have had a checking account for at least the past 12 months. Households are defined as living paycheck to paycheck if i their necessity spending exceeded 95% of their income.