How Affordability Became America’s Conversation

Most Americans probably don’t remember the exact inflation rate last year. But they remember that the footlong they once paid 5 dollars for is now between ten and fourteen bucks. They remember when a fast-food meal cost a lot less than a movie ticket. And they also remember when a car insurance premium didn’t feel like a second car payment.

Those mental price anchors are how consumers track affordability.

Not by what the Fed and economists tell them about the shrinking inflation rate. Not what the BLS reports about CPI. But the hole they feel in their pocket when the things they used to buy now cost a lot more.

And when enough of the bills that account for their monthly expenses now get in the way of how they’d like to spend their paycheck. For many consumers, it feels like something fundamental has shifted.

That’s the context of the affordability conversation in America right now.

Budgets Become a Different Discussion

Conversations about affordability have never been about having everything. They’ve  always been about choices, trade-offs and setting priorities.

For years, those trade-offs were familiar and largely discretionary. Consumers debated vacations versus home renovations, newer cars versus more savings, spending now versus stashing money away for college tuition when the time comes. The basics were assumed to be covered, and affordability conversations revolved around preferences rather than pressure to cover the day-to-day.

That framework has shifted.

Not because consumers have suddenly become less disciplined or more extravagant. But because the nature of the trade-offs has changed. Today, affordability decisions increasingly center on sequencing how to pay for necessities and managing cash flow rather than making go/no go decisions about whether to take the ski trip with the kids or put a pool in the backyard.

For a growing share of households living paycheck to paycheck, the question isn’t whether to make smart choices, but whether there is enough left over at the end of the month to even have those conversations.

Rising prices on everyday items stands as the most universal challenge, cited by 87% of all consumers, according to new PYMNTS Intelligence research.

Among those living paycheck to paycheck with difficulty paying bills, that number climbs to 91%. Even among consumers not living paycheck to paycheck, 87% cite rising everyday prices as a financial challenge. Whether a consumer is making $40,000 or $150,000, they’re going to the same grocery stores, buying the same stuff, watching the prices climb. The difference is that at $150,000, the grocery bill going from $600 to $800 per month is irritating. At $40,000, it’s unmanageable.

Which is why the comment last week about the $3 meal landed with such a thud.

Let Them Eat Broccoli

When Agriculture Secretary Brooke Rollins suggested that Americans could assemble a healthy meal for around $3 — a piece of chicken, broccoli, a corn tortilla, and “one other thing” — the reaction by Americans was swift and intense. Social media mocked the suggestion, lawmakers staged visuals of lonely pieces of broccoli on plates.

The phrase itself became consumer shorthand for perceived tone-deafness in Washington.

The angst is coming from the implication that affordability challenges can be meaningfully addressed through “smarter” choices at a time when many households have already played three-dimensional chess with the income and expense variables within their direct control.

The biggest components of household budgets — housing, healthcare, insurance, utilities, transportation and debt service — have reset higher over the past several years and show little evidence of reverting. These are not expenses consumers can easily comparison-shop, negotiate away or substitute out of. Even highly financially capable households feel constrained. They may be able to zig and zag their way around higher prices, but they share the same disdain for watching prices on the things they used to buy continue to rise.

They, too, lend their voices to the conversations about affordability.

Some economists and others have said the consumers really don’t have much to complain about because their paychecks are fatter too. The problem is that the overwhelming number of people don’t think or act like that’s true.

The Hard Numbers About The Hard Choices

New research from PYMNTS Intelligence puts hard numbers to what millions of Americans are feeling when they have those conversations.

Among households earning $100,000 to $150,000 annually, the share living paycheck-to-paycheck by necessity has doubled in the last twelve months, from under 10% in early 2025 to 24% by December 2025.

Note: Consumers who report living paycheck to paycheck are classified under choice or necessity status based on a proprietary weighting scheme that considers their household composition, number of dependents, income sources, debt and spending habits. The purpose of the choice or necessity classification is to provide an indication of factors that are likely to contribute to living paycheck to paycheck due to choices in spending or living versus factors that may be more outside consumers’ control.

These aren’t minimum-wage workers or people who got out over their skis with bad spending choices. These are households that are solidly upper middle class. And nearly a quarter of them now report that they’re living paycheck to paycheck not by choice, but by necessity. Meaning that after paying for housing, healthcare, transportation, childcare and debt, there’s little left over.

This research  distinguishes between paycheck-to-paycheck living “by necessity” and “by choice” because the distinction matters enormously.

A consumer living paycheck to paycheck by choice has agency. Maybe they’re maxing out their 401(k). Maybe they’re aggressively paying down debt. Maybe they’re saving for a house or prioritizing sending the kids to private school. They’re making trade-offs, but how they do it is under their control.

A consumer living paycheck to paycheck by necessity has no such degrees of freedom. They’re not optimizing, not strategizing. They’re mostly surviving the weekly head-on collision between what they earn and what life costs.

The Demographic Fault Lines

Affordability may be everyone’s topic of conversation, but financial strain isn’t distributed evenly.

Generationally, paycheck-to-paycheck living by necessity rose for all age groups between 2024 and 2025, but millennials and Gen Z saw those rates peak in mid-to-late 2025. These are people in their prime working years, the years when previous generations were building wealth and establishing solid financial foundations.

Even Baby Boomers, who generally have lower rates of living paycheck to paycheck due to necessity compared to Gen Z, are caught in this upward trend. Retirees and near-retirees are discovering things could get a little financially shaky, with limited options for how to navigate the gaps.

Family structure creates even starker divisions.

Single adults with children face the highest and most volatile rates of financial strain and are consistently the most vulnerable group in the data. Married adults without children fare best, benefiting from two incomes and no childcare costs, the only combination that seems to provide genuine breathing room. Married couples with children fall in between, but the gap is narrowing as childcare and education costs continue to rise.

Employment type matters a lot, too. Retail and labor economy workers have the highest rates of living paycheck-to-paycheck by necessity, and the volatility in their financial lives is increasing. High-skill technology roles show the lowest rates. The gap between job categories is widening, meaning the economy is increasingly sorting people into two categories. Those who can absorb financial shocks and those who are one emergency away from a potential financial disaster.

The Cost of Daily Life

The PYMNTS Intelligence research asked consumers to identify which aspects of the cost of living and financial management are currently challenging them. The answers create a map of the source of much of the affordability narrative.

Daily living expenses challenge 66% of consumers living paycheck to paycheck with difficulty. When you drill into the specifics, groceries and household essentials hit 87% of struggling consumers who cited this challenge. Clothing and personal care items challenge 58% of those struggling who cited daily living expenses as a challenge, compared to just 33% of those not living paycheck to paycheck.

Housing costs create challenges for more than half (56%) of consumers living paycheck to paycheck with difficulty. Rent, mortgage and utility and internet payments specifically challenge three quarters of struggling consumers. These aren’t luxuries that can be eliminated from the monthly spend. These are the baseline costs of having a place to live and keeping the heat and lights on.

The math on housing has become brutal. Rents have increased 30-40% in many markets since 2020. A one-bedroom apartment that cost $1,400 in 2020 now costs $1,900 or $2,100, depending on the market. For buyers, the situation is even worse. Home prices are up 30-50% in many areas, and even where prices have plateaued, mortgage rates went from under 3% to over 7%. A $400,000 house with a 30-year mortgage at 3% interest costs $1,686 per month in principal and interest. That same house at 7% interest costs $2,661 per month. That turns out to be an extra $975 monthly, an extra $11,700 annually, for the exact same property.

Transportation and auto expenses affect more than a third (35%) of struggling consumers. Auto insurance plus gas and vehicle maintenance challenges two thirds of those struggling to pay bills. Car insurance has become its own line-item expense, with rates doubling in many states between 2022 and 2025.

Healthcare and wellness expenses challenge 42% of struggling consumers. Health insurance premiums affect more than six in ten consumers across all categories. And this one hits almost everyone equally, because even “good” employer-sponsored insurance now runs $300-500 per month for individuals and $1,000-1,500 for families. On top of that, employees and their families still have out-of-pocket costs for co-pays and when they are under their deductible limit.

Debt and credit obligations affect 52% of struggling consumers. Credit card payments and interest challenge two thirds of those struggling to pay bills. Managing multiple debt payments hits a little less than half (45%).

Future planning and savings challenges affect 48% of struggling consumers, but the specific numbers are alarming. Building an emergency fund proves challenging for seven out of every ten struggling consumers. Saving for retirement challenges nearly two-thirds. The people who most need emergency savings — those most vulnerable to financial shocks — are the least able to build that buffer.

The Coping Strategies That Aren’t Working

When asked what steps they’re taking to manage these financial challenges, consumers reveal patterns of playing hopscotch with expense management rather than strategic financial planning.

Among struggling paycheck-to-paycheck consumers, two thirds report cutting back on everyday spending. Consumers who are not living paycheck-to-paycheck are cutting back too. More than half (56%) report putting the brakes on everyday spending.

More than half of struggling paycheck to paycheck consumers (52%) say they avoid making large purchases or investments. Thirty-five percent have borrowed money from family or friends to cover gaps. Thirty-two percent have taken on additional work or income sources. More than a quarter (26%) have negotiated bills or payment plans. One in five reports using buy-now-pay-later options.

People under the most financial stress are doing more of everything. Working more hours. Borrowing more from family. Cutting more from their daily lives. But they’re also the ones least able to sustain these strategies over time.

Three-quarters of people actively trying to manage their financial stress don’t think their efforts are really working. Because they aren’t. It’s hard to budget your way out of a structural affordability crisis. And the recognition that the consumer is doing everything they can and it’s still not enough compounds the sense of frustration that many now feel.

The American consumer is also planning for even higher prices over the next year.

According to PYMNTS Intelligence, more than four in ten consumers expect price increases of 5% or more, with minimal variation based on whether consumers live paycheck to paycheck by choice or necessity.

For households with savings who say they don’t live paycheck to paycheck, high prices are annoying. For those living paycheck to paycheck by necessity, they feel more like the sword of Damocles.

That’s why the macro-economic story can be technically accurate — low unemployment, moderating inflation, rising wages — and still completely miss the daily reality of millions of consumers who feel like they are doing everything “right” and still can’t comfortably afford enough of what they need to feel financially secure.

Credit Card Caps and Unintended Harm

This is the backdrop for the debate over capping credit card interest rates. On the surface, cutting APRs from the mid-20s to 10% sounds like an obvious way to help consumers who are so-called “drowning in debt.”

PYMNTS Intelligence finds that 66% of struggling consumers cite credit card payments and interest as a major challenge, and 45% juggle multiple debt payments.

But the same data shows that for consumers living paycheck to paycheck by necessity, credit cards aren’t financing extravagance. They’re cash flow bridges covering expenses, when cash is tight and savings are lean or may not exist.

Without access to that credit, consumers say they would be forced to borrow from family or friends or turn to predatory credit alternatives.

If policymakers push rates below what banks need to cover defaults and operating costs, issuers don’t simply acquiesce. Lending is a risk-based business and credit cards are unsecured loans. So banks tighten underwriting. Raise minimum credit score thresholds. Cut credit limits. Close accounts. Deny more applications. Add annual fees to get and keep a credit card. Slash rewards. With the harshest effects falling on those already on the edge.

Without mainstream revolving credit, the relevant comparison isn’t 28% versus 10%. It’s 28% versus the predatory effective rates charged by alternative providers.  Or basically deciding for the American consumer that they have to do without the things they need for their family.

Of course, policymakers must know this. Begging most then to ask, why is this idea being floated in the first place, when it’s never worked anywhere in the world it’s been tried?

The Resilience Paradox

Taken together, all of these data points are what make the affordability conversation so confounding.

By many measures, the consumer is astonishingly resilient. They adapt. They adjust. They find ways to make impossible math work.

The headline numbers make that point. Consumer spending hasn’t collapsed. Retail sales continue. Restaurants are still crowded.  The economy keeps growing. Pundits point to this and declare the consumer strong.

In a sense, they’re right.

The American consumer has absorbed price shocks that would have been unthinkable five years ago and kept going. That’s remarkable.

But resilience isn’t thriving. And survival isn’t stability.

Only a quarter of struggling consumers say their strategies are working well. Forty-four percent have cut non-essential purchases compared to three months ago. Seventy percent can’t build emergency savings at all.

What we’re seeing isn’t strength. It’s resignation. And endurance.

Strength implies reserves, options, cushion.  Resignation and endurance are holding on. Getting by.

The Puzzle No One Can Solve

That’s why the affordability crisis is so hard to address. It doesn’t fit neatly into traditional economic categories or conventional solutions.

By standard metrics, things should feel fine. Unemployment is low. Wages are up. Inflation has cooled. GDP is growing.

And yet, consumers go berserk over the notion that they can easily find a $3 meal. Or should even have to.

Maybe we’re measuring the wrong thing.

Traditional economic metrics tracks flows. Income, prices, employment. Affordability is about buffers that smooth those flows. How much income is already spoken for. How close consumers are to hitting the wall.

By the flow metrics, things look pretty good. By the day-to-day metrics, many people are close to the wall.

That makes consumers resilient the way a marathon runner at mile 25 is resilient. Still putting one foot in front of the other, but slowing down, with not much left in the tank.

What Comes Next

There is the optimistic case: That inflation cools further, wages rise and the gap between income and expenses slowly closes. Savings rebuild. Debt declines. Affordability becomes about the right kind of choices again.

The pessimistic case: Another shock. More tariffs. Higher prices, a recession, a supply chain disruption, a geopolitical event hits consumers with no buffer left. Endurance turns into something more like beaten down.

The treading water case: Nothing breaks, but nothing gets much better. Consumers adapt, cut, juggle. Affordability conversations are muted but the reality remains.

When 70% can’t build emergency savings, when 91% of consumers who cite cost of living challenges expect prices to keep rising, when most coping strategies don’t feel effective, there’s only so much more resilience we might be able to expect from the consumer.

The $3 Meal Revisited

Back to the $3 meal. It struck a nerve because it reminded so many people that they’re already doing everything they can yet still feel like it’s not enough. And those in charge are out of touch.

That makes affordability anything but a myth. It’s the shorthand for the mismatch between what the “data” says and the reality lived by the American consumer.

And just like that $3 meal, it’s hard to feel full — or satisfied — with that.

Until NEXT time.

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