Marcus Satterfield has a very good job in Virginia Beach and makes first rate pay, and has by no means actually needed to fret about offering for his younger daughter – particularly across the holidays.
Normally, the lounge can be flush with presents and toys. He’d host Christmas breakfast and dinner.
This yr, vacation gatherings had been scrapped, the only father’s Christmas funds was slashed in half, and his bank cards had been glutted from months of futile efforts to maintain up with the rising price of dwelling.
In Surprise, Arizona, retiree Helen Nerviano has had a heck of a time getting her mounted revenue to stretch. She lives along with her 80-year-old husband who has late-stage Parkinson’s and requires full-time care.
The price of on a regular basis items and providers remains to be increased than standard, and managing surprising bills – particularly further hospital visits and medical payments – has grow to be all of the harder.
A brand new yr usually provides alternatives for recent intentions and monetary goal-setting.
However, for a rising swath of US households, financial pressures have hit like a punishingly stiff wind. Many Americans are heading into 2026 worse off, and their monetary sport plans have shifted.
“I was thinking about driving for Uber on the side, just to be able to get the extra income and so I can buy more groceries,” mentioned Satterfield, 38, conceding that the trade-off can be sacrificing time along with his 8-year-old daughter.
Nerviano, 76, mentioned she is going to attempt to discover employment in 2026 to assist convey in some additional revenue. She additionally hopes to win the lottery. Otherwise, one path ahead is a possible chapter.
“I don’t know of any other way out,” she mentioned.
On paper, the US economy doesn’t look too shabby.
It grew at a robust 4.3% clip through the third quarter, powered in half by sturdy shopper spending. Interest charges are edging down, inflation hasn’t breached 3% this yr, the jobless fee is hovering inside these “full employment” bounds of 4% to five%, wages are nonetheless outpacing inflation, households are maintaining with their debt funds on mixture and shares preserve hitting file highs.
For many Americans, nonetheless, it certain doesn’t look like growth instances.
The financial good points have been uneven. The Federal Reserve’s rate of interest cuts haven’t utterly lowered borrowing prices. Inflation remains to be rising faster than usual. The overwhelming majority of industries are in a “hiring recession,” and it’s taking months to discover a job. Wage development is slipping. Consumer mortgage delinquencies are on the rise. And the majority of the inventory market good points are further enriching the wealthiest of US households.
Call it what you’ll – a K-shaped, two-lane, or windchill economy – however Americans haven’t felt this poorly about current financial circumstances since early 2021, when the nation was nonetheless in the shadow of a worldwide pandemic.
“The more well-to-do households are powering spending; they’ve been able to deal with the higher inflation over the last couple of years,” mentioned Justin Begley, an economist at Moody’s Analytics. “Whereas, the lower end of the income spectrum and middle-income households are still spending, but they’re finding it harder to do so – given the fact that only just now are their wages starting to catch up with inflation.”
And family debt is mounting: It hit a recent file excessive of $18.59 trillion earlier this yr, information from the Federal Reserve Bank of New York reveals.
However, the eye-popping determine tells solely a part of the story. The ranges of credit score balances might be influenced by a wide range of components (together with inhabitants development and elevated digital commerce), they usually don’t present how individuals are managing that debt.
On the combination, US households are maintaining with their payments. The carefully watched debt service ratio, which is debt funds as a proportion of disposable revenue, has climbed from historic lows in 2020 however nonetheless sits slightly below pre-pandemic charges, Federal Reserve data shows.
However, the newest debt and credit score information additionally reveals there are many pockets of economic ache.
During the third quarter, the share of bank card balances that turned critically delinquent rose to 12.41%, the best fee in greater than 14 years, in response to the newest obtainable information from the New York Fed.
That report additionally confirmed that shopper bankruptcies rose to the best degree in 5 years, that the share of recent delinquencies throughout all mortgage merchandise inched as much as an 11-year excessive and that scholar mortgage delinquencies proceed to hit file highs (with debtors 50 and older accounting for the biggest share).
The scholar mortgage delinquencies – a nasty facet impact of pandemic aid applications expiring and mortgage forgiveness efforts falling brief – have began to degree off in latest months.
“But they’re leveling off near an all-time high,” Begley mentioned. “So, it’s not particularly encouraging. We could see as many as 4 million defaults in the next 12 months.”
Past-due loans can set off a Rube Goldberg-like cascade of penalties: Tumbling credit scores, diminished opportunities to buy a home or get a loan, garnished wages or lowered federal advantages and an additional pullback in spending or elevated reliance on bank cards.
The crippling debt isn’t occurring in a vacuum. The price of dwelling continues to develop – utility payments, insurance coverage, housing, groceries … you title it – whereas safety nets have been cut back.
Prices aren’t rising as shortly as they did in the aftermath of the pandemic, however they’re rising quicker than regular — and the prices of some items are increased due to President Donald Trump’s wide-scale tariffs.
Satterfield sees it in the toys he purchased his daughter for Christmas, the hire that’s due each month, the journeys to the grocery retailer, and the sharply increased electrical invoice.
“I’m used to my electricity bill being $130 to $150, and I just got one this month that was $252,” he mentioned. “Essentially, $100 more than previous years. And that extra $100 could have gone to providing more groceries or household items for me and my daughter, or just a nest egg to save for emergencies and things like that.”
When Helen Nerviano retired on the age of 62, her month-to-month medical health insurance prices had been $170.
“I thought, ‘Well, that’s doable,’ and I did all my math and made sure I could afford where I moved,” mentioned Nerviano. “Had no clue what was on the horizon – the prices of food, insurance, clothing, and I adopted my granddaughter. It was just like a storm of events that I wasn’t planning on when I retired.”
And in latest years, it’s solely intensified.
“It’s just a constant, never-ending struggle,” she mentioned. “I go to the grocery store, I put things in my cart; by the time I get to the checkout, I turn back around and start taking things out, because I tell myself, ‘You can’t afford this.’”
“It’s perpetual. There’s no end in sight,” she added.
Satterfield, Nerviano and a bunch of different Americans nonetheless contemplate themselves optimists, and there are some glints of hope for the glass-half-full camp in 2026.
If the latest slate of consumer-focused corporations’ earnings calls is any indication, costs may begin shifting decrease for sure merchandise, mentioned Adam Josephson, a longtime paper and packaging sell-side analyst who now authors an economics e-newsletter.
“An increasing number of consumer related companies are cutting prices to try to stimulate demand: You’re seeing it with the homebuilders. You’re seeing it with the [consumer packaged goods] companies,” Josephson mentioned. “The reasons why they’re cutting is because people cannot afford their products.”
Many of these corporations “raised prices on the order of 20% to 40% during the pandemic, depending on the company,” Josephson mentioned. Still, a 4% trim right here and an 8% lower there can be welcome to cash-strapped customers.
But even when some costs do inch down, that may very well be occurring at a time when revenue development is projected to sluggish additional because of the continued weakening labor market, mentioned Moody’s Analytics economist Begley.
Further aid may doubtlessly come from the Fed additional lowering rates of interest, in addition to potential advantages from new “One Big Beautiful Bill”-related tax cuts, he mentioned.
“So that ‘no tax on tips,’ ‘no tax on overtime,’ and, of course, the higher deduction for Social Security taxes plus expansions for the child tax credit, those should help lower-middle-income households weather any storm that comes their way,” Begley mentioned. “It won’t replace a job if unemployment meaningfully rises, but it will help.”
The greatest increase, nonetheless, would come from a discount in tariffs, he mentioned, noting ongoing negotiations enhance the chance for a decrease efficient tariff fee in addition to the potential for the Supreme Court to overturn among the duties.
“If the Trump administration does indeed pull back on tariffs, that would just be a real boon for the economy, because it’ll materially increase certainty,” he mentioned. “It’ll take the pressure off of businesses to bear the majority of these, and it’ll limit the inflationary impact.”