A six-figure annual salary used to be a milestone for career success and financial security, but that’s not what it used to be.
The era of heightened inflation that began during the COVID pandemic has eroded the value of $100,000 to such an extent that Americans who earn as much as everyone else are looking for bargains.
Walmart has previously found that more affluent customers shop at the discount chain. And now they prefer deep discounters like dollar stores.
On Goldman Sachs Global Consumer and Retail Conference on Tuesday, Dollar General CEO Todd Vasos said core customers, which he defined as those making less than $45,000 a year, change their purchasing behavior when gas prices reach $4 a gallon.
For example, they tend to shop closer to home, shop more frequently, and shop less on each trip. Shopping frequency increases because customers don’t know what the next week will bring and buy what they can, whenever they can.
“But the interesting thing about this economy is that because of the other persistent headwinds of inflation over the past few years, even the middle to upper middle class is behaving more like a lower-income shopper these days,” he said, according to a I’m looking for an alpha transcript.
The national average price of gasoline is now $4.476 per gallon, up from $3.189 a year ago. according to AAAas President Donald Trump’s war on Iran disrupts global oil markets. The price of diesel has risen to $6.50, making shipping by truck more expensive.
But it’s not just the energy costs. The costs of electricity bills, new and used cars, insurance, food and care have skyrocketed. Vasos said even those making $100,000 or more a year are feeling the pressure.
“I would tell you what we’re hearing more and more from them is, ‘I don’t feel like $100,000 is a higher income anymore,’ because of all the headwinds I just mentioned,” he added. “That’s why we at Dollar General believe we’re in a really good position to serve all the diverse populations that we have.”
However, consumers remain very resilient and the main reason for this is that they remain employed, Vasos explained.
In fact, consumers’ ability to adapt to higher prices has been a hallmark of the U.S. economy recently. The latest retail sales report showed a better-than-expected rise of 1.2% in August and a gain of 1.1% after excluding gasoline.
As long as employment continues, Dollar General customers will find a way to navigate the inflation landscape, he predicted.
“Owning 2,000 items priced at $1 or less has always been of great importance to the consumer, but especially in this environment,” Vasos added.
There are other signs that making $100,000 isn’t enough to avoid economic anxiety. A Poll from the Harris Poll Last year it was found that 64% of six-figure earners said their income was not a milestone for success, but merely that the bare minimum to stay afloat.
In fact, even those earning $200,000 or more have resorted to financial tactics often associated with less affluent consumers. For example, 64% said they used rewards points to pay for essentials, 50% used buy now, pay later plans for purchases under $100, and 46% relied on credit cards to make ends meet.
And Michael Green, chief strategist and portfolio manager at Simplify Asset Management, wrote a viral Substack post last year argued that real poverty line should be $140,000.
Traditional measures don’t capture how much Americans are struggling with the cost of living, even households with six-figure incomes, he said.
“If the crisis threshold – the floor below which families can no longer live – is honestly adjusted to reflect current spending patterns, it is $140,000,” Green added.