American consumers don’t feel very good about the economy or their financial situation, and the phrase “affordability crisis” has dominated headlines and political campaigns in recent months.
A Marist poll of more than 1,400 adults conducted in December found that a majority of Americans surveyed (70%) say the cost of living in their area is either not very affordable or not at all affordable for the average family.
President Donald Trump called the term “affordability” a “Democrat con artist operation” in a speech in early December, but other politicians say it’s an issue for voters.
“The affordability crisis is not a myth, it is a reality felt by Americans around the world.” Rep. Sarah McBride, D-Del. said in the newsletter.
Nearly half of Americans say their financial situation is worse than it was a year ago, according to a recent Credit Karma survey. And, according to a monthly survey by the University of Michigan, consumer sentiment in December was 29% lower than in 2024.
Although the annual inflation rate has fallen from the historic high the U.S. hit in 2022, prices for basic goods remain high and some categories continue to rise. Coffee prices in November 2025 were up nearly 19% from a year earlier, and beef prices were up about 15%, according to data from the Bureau of Labor Statistics.
Housing costs rose more than 14% from September 2023 to September 2025, according to data from the Bureau of Labor Statistics. Health care costs have increased by nearly 7% over the same period, and service costs have increased by more than 8%. While some of these price increases are related to supply issues, President Trump’s tariff policies are also pushing up the prices of staples like bananas and coffee and discretionary items like toys and electronics.
“People aren’t overspending,” says Joey Cooley, partner and senior wealth advisor at Mission Wealth. He added that while low- and middle-income earners in particular are not “spending extravagantly,” as the cost of living rises, it is becoming harder to stay within a regular budget.
Consumers are “trying their best”
Consumer spending has increased in each subsequent quarter despite deteriorating sentiment and declining consumer confidence, according to the Conference Board’s monthly survey by the Bureau of Economic Analysis.
“What we are seeing is that there are still inflationary pressures across the system, particularly in the retail environment.Through our research, consumers are telling us they are effectively navigating this situation,” said Will Auchincloss, Americas retail sector leader at EY Parthenon. “They’re trying to buy things they’ve always bought or wanted to buy, but the prices have gone up.”
She said higher-income people may be cutting back on non-essentials, such as vitamins and supplements, or turning to cheaper alternatives.
But low-income people “are not just talking about leaving,” he said. “They are actively retreating and struggling to make ends meet.”
“Consumers are balancing a lot of pressures, including tariffs, persistent inflation, and a softening labor market,” said Leanna Haakons, a business development and marketing expert and president of Blackhawk Financial.
At the same time, “they still want a sense of normalcy and value in their purchases,” Haakons said. For some families, she says, that means being more selective about what they buy.
“Consumers are buying fewer goods overall, but they are focusing on higher-value, more meaningful purchases, things that have real value in their daily lives, such as durable goods, gifts, household items, and home upgrades,” Haakons says.
Some people borrow money to survive
While consumers may be spending steadily, many also rely on credit cards and buy-now-pay-later (BNPL) loans to fund their purchases.
U.S. credit card debt totaled $1.23 trillion as of the third quarter of 2025, according to data from the New York Fed. A LendingTree survey in April also found that more Americans say they use BNPL plans to pay for groceries.
“Consumers are increasingly borrowing to cover their spending challenges, but it’s clear that this can’t continue forever,” Auchincloss said.
As of the fourth quarter of 2025, a growing percentage of consumers are already changing their behavior, according to research from McKinsey & Company.
Almost a third (29%) of adults say they have withdrawn from their savings in the past three months, up from 26% in the third quarter. An additional 29% said they had reduced their savings rate, also up from 26% in the third quarter. Additionally, 28% are increasing their use of credit cards, up from 26%, according to a McKinsey study. BNPL usage also increased by 1 percent over the same period.
new year, same problem
The Credit Karma survey found that consumers expect to be on financial footing in 2026, and many are optimistic about achieving their goals. Still, 32% of Americans expect things to get worse in the new year, according to a recent Bankrate survey.
Rental prices could cool down in 2026, experts at real estate firm Douglas Elliman recently told CNBC Make It. But economists at Deloitte and Fitch Ratings expect overall inflation to remain above 3% for the rest of the year.
“The smartest approach for households heading into 2026 is to be selective with their spending and prioritize debt repayments in the new year,” Haakons said. He advised people to pay down their credit card balances and time their big purchases “wisely” to take advantage of potential interest rate cuts later this year.
“It is important to remain cautious heading into 2026, as there are strong indications that there may be even more difficult times ahead for employment,” she added.
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