Data Shows Household Costs Rising Faster Than Income
New data from Navicore shows that household housing and living expenses rose 6% in 2025, while average income increased by only 3%. This widening gap between essential costs and earnings indicates persistent financial strain on consumers. The trend could further fuel demand for value-oriented retailers.
- According to a YouGov poll from late 2025, about one-third of Americans (32%) report that their household income is falling behind their expenses. This is an increase from 24% who said the same in March of 2025. - The financial strain is most acute for lower-income households, with 40% of those earning under $50,000 annually reporting that their income is not keeping up with costs. However, the pressure is widespread, as even 22% of households earning over $100,000 feel they are falling behind. - In response to rising costs, 74% of consumers say inflation is directly affecting their daily spending decisions. This has led to significant shifts in brand loyalty, with nearly 70% of consumers switching to cheaper alternatives to cut costs. - A 2025 survey detailed specific consumer cutbacks, with 55% buying fewer non-essential products, 39% switching to more affordable brands, and 30% opting for private label or store brands. Notably for the user's categories, 17% reported cutting back on wellness and/or beauty spending. - This financial pressure is a long-term trend; the share of American adults living in middle-class households has decreased from 61% in 1971 to 51% in 2023. Over that same period, the share of income held by the middle class dropped from 62% to 43%, while the upper-income share grew from 29% to 48%. - Retailers focused on value are positioned to benefit from these consumer shifts. As affordability becomes a primary driver of purchasing decisions, discount retailers have seen increased traffic from consumers looking to manage their squeezed budgets. - The average U.S. household now spends $24,695 annually on the most essential household bills, which accounts for 31% of the median household income. Housing costs are the top financial worry for 44% of Americans. - While wages have seen some growth, they are not keeping pace with the rising cost of living for a significant portion of the population. This dynamic forces consumers to make trade-offs, often sacrificing discretionary purchases to cover essential needs.
