In the midst of rising costs for essentials such as food and housing, a significant number of American households have been forced to make tough financial decisions to keep the lights on at home. A recent study conducted by LendingTree, analyzing data from the U.S. Census Bureau Household Pulse Survey spanning from Aug. 20, 2024 to Sep. 16, 2024, reveals the extent of this financial strain on families across the nation.
The study shines a light on the struggles faced by Americans aged 18 and older, with over 34% of respondents admitting to cutting back on necessary expenses in order to meet their energy bills over the past year. Matt Schulz, Chief Credit Analyst at LendingTree, acknowledges the ongoing challenge of managing expenses in the face of a still-expensive economy, emphasizing the difficult decisions many are forced to make to make ends meet.
This financial burden is further exacerbated by the escalating cost of electricity, prompting questions about the root causes behind these increasing expenses. As temperatures soar, utility bills are on the rise, hitting households hard, particularly in lower-income states such as Alabama and Mississippi. In these states, more than 44% of residents have reported making sacrifices to keep up with their energy payments, reflecting a broader trend of financial strain in the region.
Schulz highlights the unique challenges faced by residents in the South, where a combination of low-income levels and credit scores compounds the difficulties of meeting energy expenses each month. With electricity prices surging nationwide, the average American spent $185.59 on electricity bills in August, a 2.6% increase from the previous year. Disparities in energy usage and rates further complicate the financial landscape, with states like Arizona and Connecticut experiencing varying impacts despite their differing average rates.
Looking ahead, Schulz predicts a continued rise in both power costs and usage, driven by factors such as climate change and utility companies seeking rate hikes to meet growing demands. As households with constrained budgets navigate these challenges, the future remains uncertain for many facing the daunting task of managing their energy expenses in an increasingly costly environment.
