Weakening incomes add new strain to households already hit by high prices

For months, Americans have voiced frustration over the stubbornly high cost of living.

But economists say a more troubling shift is emerging: consumers are increasingly reporting that their incomes aren’t keeping up with the financial pressures they face.

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Joanne Hsu, director and chief economist of the University of Michigan’s Surveys of Consumers, says the change is showing up more clearly in recent readings.

“Consumers have been expressing frustration from high prices consistently for the past several years;what makes this season different is that consumers are also increasingly mentioning weakening incomes as well,�

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“This year, they are reporting pressures on their pocketbooks from multiple sources,” she added.

Consumers are increasingly reporting that their incomes aren’t keeping up with the financial pressures they face.(David Paul Morris/Bloomberg via Getty Images)

That sense of mounting pressure is backed up by recent analysis. 

According to theBank of America Institute, inflation has risen faster than middle- and lower-income households’ after-tax wages since January 2025.

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As a result, nearly one in four U.S.households is now livingpaycheck to paycheck, a number that has grown during the past year.

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What that means is that the erosion of purchasing power is pushing more Americans to the edge of their budgets, making it harder to keep up, let alone get ahead.

Americans say that it is hard to keep up financially, let alone, get ahead.(iStock)

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That growing strain presents a political challenge for PresidentDonald Trump, who returned to the White House on promises of greater affordability.He is now confronting voter doubts about whether he can deliver.

AJoe Biden‘s term.

Trump’s economic approval has also slipped to a new low, and his overall job approval has climbed to record levels of disapproval, even among voters who have historically backed him.

President Donald Trump is grappling with affordability issues that plagued former President Joe Biden’s administration.(Aaron Schwartz/CNP/Bloomberg via Getty Images)

For now, the daily reality for many Americans remains the same: prices feel too high, paychecks feel too thin and confidence in the future is fragile. 

How quickly that changes and whether voters give Trump credit for it may determine the tone of the country’s economic and political debate in the months ahead.