Nearly Half of U.S. Households Cannot Afford Necessities in 2024
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A new Brookings Institution report finds 45.5% of U.S. households did not earn enough to cover necessities in 2024. This affordability gap is widespread, with wages lagging inflation and a $1,000 annual cost increase potentially pushing 3 million more households into hardship.
Facts First
- 45.5% of U.S. households could not afford necessities in 2024, according to a Brookings Institution report.
- A $1,000 rise in annual living costs could leave 3 million more households unable to make ends meet.
- National wages grew 1.3% in 2024, while inflation was 2.9%, widening the affordability gap.
- Food insecurity has reached levels not seen since 2020, per a Federal Reserve Bank of New York survey.
- Higher-income households saw pay rise 6% in April, while lower earners saw a 1.5% increase.
What Happened
The Brookings Institution released a research report on Wednesday analyzing household affordability across the United States. The report found that in 2024, 45.5% of households did not earn enough to cover necessities like food and transportation. Brookings researchers gathered income data for every county and compared it with estimated costs. The report concluded that a $1,000 increase in the annual cost of living would leave an additional 3 million households unable to make ends meet.
Why this Matters to You
If your wages haven't kept pace with rising costs, you may be feeling the pinch more directly this year. The gap between wage growth (1.3%) and inflation (2.9%) means your purchasing power is likely shrinking. Higher gas prices and a 3.8% year-over-year rise in the Consumer Price Index (CPI) in April are contributing to this pressure. Food insecurity is reaching levels not seen since 2020, which could affect your access to groceries. The disparity in wage gains means higher-income households may be insulated, while lower earners, whose pay rose only 1.5% in April, are more vulnerable. If your household is among the nearly 38 million identified by Brookings, a significant wage increase could make a difference.
What's Next
The Brookings report suggests a potential path: it found that nearly 38 million households would be able to get by if workers' wages rose by $10 per hour. This highlights a policy lever that could be discussed. The Federal Reserve is likely to continue monitoring inflation, which remains above its 2% target. The affordability crisis... appears set to continue unless economic conditions or policy interventions change.