We’re told that this is the greatest economy in history. Stock markets are surging. Unemployment is low. And yet despite the good times, a shocking number of Americans live paycheck to paycheck.

Several surveys cited by MarketWatch reveal the precarious financial situation many Americans find themselves in. This is less than ideal in an economy dependent on consumer spending.

According to Neilsen Data, 50% of Americans who make $50,000 per year or less live paycheck to paycheck. But it’s not just lower-income earners who struggle. A quarter of families making $150,000 more per year say they can’t save and one out of every three households earning between $50,000 and $100,000 per year live paycheck to paycheck as well. Recent reports from the American Payroll Association and the National Endowment for Financial Education found 74% of all employees live paycheck to paycheck. And according to Bankrate’s latest Financial Security Index, 30% of Americans have no emergency savings at all.

Why can’t Americans save money in the greatest economy ever?

According to the MarketWatch report, despite low unemployment, stagnant wages coupled with a rising cost of living are squeezing worker’s wallets. According to a recent Bankrate.com report, half of American workers didn’t get a “pay boost” in 2019. This includes receiving a raise or taking a job with better pay.

MarketWatch also points out that “crippling debt from student loans, credit cards and/or unexpected medical expenses is also taking a huge bite out of many workers’ take-home pay.”

Consumer debt hit record levels month after month in 2019. As of the end of October, total consumer debt outstanding stood at a record $4.165 trillion. (Seasonally adjusted) Americans owe over $1 trillion in credit card debt alone.

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The financial networks usually report surging consumer debt as good news. According to the mainstream narrative, people borrow more when they are confident in their financial situation. Here’s how Bloomberg reported yet another jump in consumer borrowing last summer.

“The surge in borrowing indicates Americans, supported by higher wages, were feeling confident enough about their financial situation to continue borrowing and spending. The economy, beset by weakness in manufacturing, housing and capital investment, remains highly dependent on the US consumer to keep driving the expansion.”

This narrative falls apart when you look at the number of Americans living paycheck to paycheck. It’s far more likely that the ever-increasing level of borrowing is because Americans are tapped out and charging everyday purchases on plastic. They’re not only living paycheck to paycheck; they’re borrowing every month just to make ends meet.

The fact that so many Americans are burdened by debt and living paycheck to paycheck is not good news when the economy’s growth depends almost completely on consumer spending. The truth is American consumers have been driving the US economy with money they don’t have. This is not a sustainable economic model.

As Peter Schiff noted in a podcast after the Q2 GDP number came out, this notion that the US economy is strong is “fake news.” Consumer spending increased by 4.3% and contributed nearly all of the GDP growth. Many of the headlines credited the American consumer with “rescuing the economy.”

“The problem is if the consumer rescued the economy, who is going to rescue the consumer? Because if you look at where the consumer is getting that money, it’s from credit. Year-over-year, consumer debt has increased by 5%. So, what is driving consumer spending is debt.”

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