U.S. lower‑income households cut 42%

Consumer spending is still growing in the headline data. But the people at the bottom of the income ladder are already acting like the squeeze is here. A fresh Bankrate survey shows households making under $50,000 are much more likely than higher earners to cut back on travel, dining out, and live entertainment this year. That matters because the economy can look fine in aggregate even while the most fragile consumers are quietly slamming the brakes. ### What actually got tighter? Discretionary spending is the easiest thing to cut when rent, groceries, utilities, and debt payments eat a bigger share of the paycheck. In Bankrate’s 2026 survey, households under $50,000 were the most likely income group to say they planned to spend less across all three tracked categories: 43% on travel, 45% on live entertainment, and 44% on dining out. Households making $100,000 or more came in much lower — 27%, 28%, and 30%. ### Why does that matter more than one survey? Because it fits a broader pattern. The Federal Reserve’s household well-being survey already showed lower-income adults were much more likely to struggle with basic bills, food, and medical costs. In 2023, 36% of adults with family income below $25,000 said they did not pay all their bills in full in the prior month, versus 6% for those at $100,000 or more. ### But isn’t spending still strong? Yes — at the top line. In March 2026, personal consumption expenditures rose 0.9% from the prior month, while disposable personal income rose 0.6%. Real consumer spending still increased too. Basically, the national spending number is still moving up. The catch is that aggregate data blends together households with very different balance sheets, so stronger spending by higher earners can mask retrenchment lower down. ### Where is the cushion going? Partly into debt service, and partly nowhere — because many households do not have much savings buffer left. Bankrate’s emergency-savings report found only 47% of Americans say they could cover a $1,000 emergency expense with savings or accessible cash. It also found 29% have more credit card debt than emergency savings. That is not a recession call by itself. But it is a sign that a lot of households cannot absorb another price jump or income shock gracefully. ### How much credit is already in the system? A lot. New York Fed data show credit card balances reached $1.28 trillion in the fourth quarter of 2025, up 5.5% from a year earlier. Total household debt hit $18.8 trillion. Delinquency also worsened, with 4.8% of outstanding debt in some stage of delinquency at the end of December, up 0.3 percentage points from the prior quarter. That does not mean everyone is in trouble. But it does mean more households are leaning on borrowing while their margins thin out. ### Why do lower-income households get hit first? Because they spend more of their income on necessities, and necessities have been the sticky part of the inflation story. When prices stay elevated and interest rates stay high, higher-income households can postpone saving a bit or draw on assets. Lower-income households usually cannot. They cut the optional stuff first — trips, restaurants, concerts — because those are the only levers left, whether you have cash, home equity, or revolving debt. ### So what is the real economic signal here? It is a warning about composition, not just level. The headline consumer still looks alive. But the marginal consumer — the one most sensitive to rates, prices, and job-market softening — looks weaker. If credit gets harder to access, or if labor income cools, the pullback that is already visible in lower-income discretionary plans could spread into broader spending categories pretty fast. ### Bottom line? The story is not that Americans stopped spending. It is that the spending data are getting more two-speed. Higher earners are keeping the aggregate numbers afloat, while lower-income households are already cutting the extras and showing more signs of financial strain.