A growing share of Americans are running out of financial cushion and new data suggests the strain is no longer confined to the lowest-income households. Instead, it is spreading across income brackets and geographies, reshaping how and where people can afford to live.
Recent findings from the Federal Reserve Bank of New York and the Brookings Institution point to a broad-based affordability crisis marked by rising food insecurity, declining consumer sentiment and a widening gap between households that are managing and those falling behind. The data reinforces what has increasingly been described as a K-shaped, or even E-shaped, economy, where financial outcomes are diverging sharply rather than converging in a post-pandemic recovery.
The New York Fed, updating its earlier pandemic-era analysis, found "a remarkable increase in food insecurity, particularly among lower-educated and lower-income households and households with young children." That deterioration comes as consumer sentiment, tracked by the University of Michigan, has fallen to levels even lower than during the Covid-19 pandemic or the Global Financial Crisis.
At the core of the divide is inflation—but not in the way headline numbers suggest. Lower and middle-income households are facing what economists describe as higher "effective inflation," driven by spending patterns that skew heavily toward essentials. As Gizem Kosar, Ishva Mehta, and Wilbert van der Klaauw at the New York Fed write, these households devote a larger share of their budgets to categories such as housing, groceries and utilities, "causing them to cut back on groceries."
That shift is showing up in behavioral data. In a monthly survey conducted by the regional Fed, respondents reported whether their households had "dipped into savings or emergency accounts to cover expenses; had trouble finding enough food to eat or had kids who missed meals; received food donations from family, friends, or food banks; or received aid through SNAP."
Between October 2025 and February 2026, there were "meaningful increases" in these indicators across demographic groups, with the sharpest rises among non-white, lower-income and less-educated households, as well as families with children.
Brookings data adds another dimension, showing that financial strain has been persistent and widespread. In nearly every year since 2014, more than 40% of households struggled to make ends meet and the situation worsened significantly after the pandemic, with a roughly 1,000-basis-point decline in the share of households able to cover basic expenses.
The variation across states underscores how multifaceted the affordability challenge has become. In 2024, the share of households able to make ends meet ranged from 39% in Hawaii to 63.6% in North Dakota. Put differently, 61% of households in Hawaii struggled to cover costs, compared with 36.4% in North Dakota. Nationally, 55% of households could make ends meet, while 45% could not.
"This mix of states shows that although headlines often focus on the cost of housing in big cities such as New York City and San Francisco, affordability crises emerge from a variety of pressures depending on the state or region, such as stagnant wages, childcare costs, transportation burdens, and weak job markets," according to Brookings.
For commercial real estate, the implications are both immediate and structural. Persistent financial strain among renters and consumers is likely to weigh on multifamily rent growth, particularly in markets where wage gains are lagging behind living costs. At the same time, increased reliance on savings and assistance programs signals a limited capacity to absorb further rent increases, even in supply-constrained markets.
Retail and neighborhood services properties may also feel the impact as households cut back on discretionary spending to prioritize essentials. Grocery-anchored centers could see more stable demand, but even there, shifts toward discount formats and value-oriented retailers may accelerate.
Geographic divergence is another key theme. Markets like Hawaii, where a majority of households struggle to make ends meet, may face more acute pressure on both housing affordability and consumer-facing real estate performance. Conversely, regions with relatively stronger household balance sheets could prove more resilient, reinforcing the uneven recovery already visible across property sectors.
Taken together, the data suggest that affordability is no longer just a housing issue or a coastal-city problem. It is a nationwide constraint that is reshaping consumer behavior and, by extension, the demand fundamentals underpinning multiple commercial real estate asset classes.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.