To receive daily news and insights, subscribe to our free daily Retail Dive newsletter. More U.S. households feel financially vulnerable – 17% compared to 15% in 2025 – reversing progress recorded a year ago, according to a survey from The Financial Health Network and the University of Southern California. Less than 70% said they paid all their bills on time over the past 12 months, down 3 points from last year, per the research.
Those reporting "unmanageable levels of debt" rose from 29% to 31%. Since 2019, low-income consumers shifted more than $10 billion from discretionary purchases toward essentials like groceries, while higher-income consumers shifted more than twice that amount toward discretionary spending, according to research from Numerator. Pandemic-era financial support from the federal government has dried up and inflation is taking a toll, leaving more U.S. households struggling, according to this research from The Financial Health Network and the University of Southern California's Dornsife Center for Economic and Social Research.
For many, the future also looks bleak, as the number of consumers expecting to be worse off financially in five years "rose sharply between 2020 and 2026," according to their report. This is hitting certain populations especially hard. Recently enacted restrictions on federal nutrition and medical assistance programs have offset tax breaks.
Student loan delinquencies — a priority during the Biden administration — are now occurring at high rates, with more than a quarter of student loan borrowers saying they are financially vulnerable, up from 21% last year. Many immigrants have left the workforce amid heightened immigration enforcement, which has reduced spending in that cohort. Since January 2018, prices have risen 35% for low-income consumers and 31% for high-income consumers, according to Numerator.
"Perhaps in response to the volatility of the post-pandemic world, U.S. households began to express a growing sense of financial uncertainty and pessimism," the Financial Health Network authors said in their report. "Uncertainty about expectations for both earnings growth and inflation grew following the pandemic." Despite these pressures, consumer spending has held steady this year even on discretionary items. "That said, macro pressures have persisted and intensified, elevated inflation, higher oil prices, and other disruptions could weigh on consumers more than expected so far, pressuring sales trends in 2026 with additional challenges such as increasing transit costs and other commodity prices," Telsey Advisory Group analysts led by Dana Telsey said in a Tuesday research note.
Retail sales in the segments covered by Retail Dive rose 6.7% year over year in August, buoyed somewhat by later-than-usual shopping for back to school, according to Chip West, retail and consumer behavior expert at RRD. Strong spending should continue into this month and next "as consumers keep finding ways to spend and retailers move aggressively to get holiday inventory in front of shoppers earlier," he said in emailed comments last week. "Many consumers are tapping into their savings to continue spending, but how long that can continue will depend in part on where gas prices go from here," he said.
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