Report: Household Costs Outpacing Income
New data from Navicore shows that housing and living expenses for households rose by 6% in 2025, while average income only increased by 3%. This widening gap between essential costs and earnings indicates persistent financial strain on consumers.
- The financial strain is not primarily driven by new debt, but by structural affordability challenges where essential costs are growing faster than income. - Total U.S. household debt reached $18.8 trillion in the fourth quarter of 2025, with credit card delinquency rates climbing to their highest levels in nearly a decade. - In 2025, the cost of owning and maintaining a home was estimated to be $21,000 per year, putting even homeowners with significant equity at risk of being "cost-burdened" (spending over 30% of income on housing). - Lower- and middle-income households have increasingly relied on credit to manage higher living expenses, pushing non-housing household debt to a record of around $5 trillion in 2025. - Specific sectors saw significant price increases in 2025, with at-home food prices rising 2.4%, food away from home jumping 4.1%, and employer-sponsored family health insurance premiums increasing by 6%. - By the end of 2025, about 29% of people were using their savings to pay for expenses, and a similar percentage were saving at a reduced rate compared to the previous quarter. - The impact of rising costs is uneven, with lower-income households experiencing higher effective inflation because essentials like housing, food, and electricity make up a larger portion of their spending (64% vs. 58% for higher-income households). - Despite the pressures, overall consumer spending remained a key driver of the U.S. economy in late 2025, partly propped up by wealthy Americans whose spending was supported by rising home and stock values.
