Low- and middle-class households are still struggling to keep up with inflation and household debt, according to multiple new surveys. To make matters worse, economic relief for these families could take years to be realized, according to expert commentators.
The study also polled families with all adults under the age of 65 with children in the home, and found that a greater percentage (58 percent) fell below their TCES economic health threshold.
The National True Cost of Living Coalition (NTCLC) praised the methodology of the Urban Institute’s survey, which aligned with its own survey commissioned in the summer of 2024.
“Because it goes beyond looking just at basic needs, this new measure fundamentally shifts the discourse to what resources families need to thrive, not just survive.”
Another report released in September by the Financial Health Network also paints a bleak picture of the financial health of the American family.
Among the relevant findings: Between 2023 and 2024, those spending less than their income decreased from 49 percent to 47 percent, the proportion of middle-income households that were financially vulnerable increased to 14 percent from 11 percent, and fewer respondents were paying bills on time or had short-term savings.
According to the study, purchasing power for middle-income Americans just recently moved above 2019 levels. Primerica’s HBI rose to 103.1 percent of that level in October, up 3.4 percent from October 2023, and up from 102.7 percent in September 2024, the highest since January 2021.
If the HBI index is above 100 percent, the purchasing power of middle-income families is more potent than in the baseline period. They may have extra money left over at the end of the month that can be applied to things such as entertainment, additional savings, or debt reduction. If it is under 100 percent, households may have to reduce overall spending to levels below budget, reduce their savings, or increase debt to cover expenses.
The HBI uses January 2019 as its baseline, setting HBI at 100 percent for that month. The index hit its low of 86.7 percent in June 2022, when inflation had peaked at a 40-year high of 9.1 percent.
Government Spending Cuts Are Key to Bringing Economic Relief
Peter St Onge, an economic research fellow at The Heritage Foundation, told The Epoch Times that cutting government spending is key to bringing down inflation, thus restoring economic stability for lower- and middle-class families.People in the United States are currently facing significant obstacles that hinder their ability to grow their businesses, Onge said.
“If the government cuts spending, it returns the economy to the people,” he said.
Onge believes the spending cuts proposed by President-elect Donald Trump’s Department of Government Efficiency could reduce inflation by “10 to 30 percent.”
However, Onge also warned that it will take time for Americans to feel the economic relief.
“In economics, things take a long time to happen. For example, any Fed (Federal Reserve) rate cuts will take 18 months to make a difference. The economic changes Trump wants to make could take 12–24 months before we see a significant difference,” he said.
Onge said that the financial situation for middle-class Americans is relatively stable but the lower class, particularly young people, is facing severe challenges.
“The rate of young people living with their parents is at Great Depression levels,” he said.
“Are people suffering right now? There is a lot through any metric you look at. But everything is relative. It’s not at a Bangladesh level, because it’s not like people aren’t able to eat. But they’re moving in with their parents. The free market economy needs to grow at 5 percent or more and if it doesn’t, then the government is getting in the way.”