Weakening incomes add new strain to households already hit by high prices
As the holiday season approaches, a troubling economic trend is emerging in the United States: consumers are increasingly reporting that their incomes are failing to keep pace with the rising cost of living. For months, Americans have expressed frustration over persistent inflation, but recent surveys indicate a shift in sentiment. According to Joanne Hsu, the director and chief economist of the University of Michigan’s Surveys of Consumers, this year marks a significant change as consumers are not only grappling with high prices but are also voicing concerns about stagnant or declining incomes. Hsu noted that this dual pressure is creating a more complex financial landscape for households, with many feeling the squeeze from multiple sources.
The economic data supports these concerns, revealing that inflation has outstripped after-tax wage growth for middle- and lower-income families since January 2025. A report from the Bank of America Institute highlights that nearly one in four U.S. households is now living paycheck to paycheck, a statistic that has worsened over the past year. This erosion of purchasing power is pushing more Americans to the brink of their financial limits, making it increasingly difficult to manage daily expenses, let alone save for the future. The implications of these economic pressures extend beyond individual households; they present a significant political challenge for President Donald Trump. Despite his promises of economic improvement, a recent Fox News national survey indicates that 76% of voters now view the economy negatively—a sharp increase from previous months. Trump’s economic approval ratings have plummeted, contributing to a broader sense of disillusionment among voters, including those who have traditionally supported him.
As Americans navigate this challenging economic landscape, the overarching sentiment remains one of uncertainty. With prices continuing to rise and wages stagnating, many citizens are left feeling financially vulnerable and anxious about the future. The upcoming months will be crucial, as the way these economic challenges are addressed could significantly influence the political climate ahead of the elections. Observers will be watching closely to see how quickly conditions improve and whether voters will attribute any economic recovery to Trump’s policies or leadership. The current state of the economy is not just a matter of financial statistics; it is a reflection of the everyday realities faced by millions of Americans, and how these realities are managed will shape the national conversation for the foreseeable future.
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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.
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,” Hsu told Fox News Digital.
AS THE HOLIDAYS APPROACH, THANKSGIVING BECOMES TRUMP’S ECONOMIC TEST
“This year, they are reporting pressures on their pocketbooks from multiple sources.”
That sense of mounting pressure is backed up by recent analysis.
According to the
Bank of America Institute
, inflation has risen faster than middle- and lower-income households’ after-tax wages since January 2025.
As a result, nearly one in four U.S. households is now living
paycheck to paycheck
, a number that has grown during the past year.
NEARLY 1 IN 4 AMERICAN HOUSEHOLDS LIVING PAYCHECK TO PAYCHECK, REPORT REVEALS
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.
That growing strain presents a political challenge for President
Donald Trump
, who returned to the White House on promises of greater affordability. He is now confronting voter doubts about whether he can deliver.
A
Fox News national survey
shows 76% of voters now rate the economy negatively, up sharply from 67% in July and 70% at the end of former President Joe 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.
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.
