Since 2021, consumer prices in the United States have risen 22.7%, while wages have grown 21.5%—a cumulative gap of 1.2 percentage points, according to Bankrate’s 2025 Wage to Inflation Index. Separately, housing now consumes 32.9% of the average household’s budget, and home prices are up 60% since 2019. The federal minimum wage is still $7.25 an hour. Those numbers coexist, and somehow the debate about whether Americans can afford their lives is still unresolved.

1. Most People Are Fine, Actually (The Economist, Allison Schrager/Manhattan Institute)

The aggregate data says the crisis is overstated. The loudest complaints come from people who can’t afford luxury, not necessities.

There simply isn’t a widespread affordability crisis in the US. Alison Schrager of Bloomberg and the Manhattan Institute explains: Real income growth is still positive for most Americans. Food prices are up 27% since 2020 and still rising about 3% a year, which is a real burden for lower-income households—but food remains a small part of the average household’s budget. The Bankrate wage-to-inflation gap has narrowed from -4.8 percentage points in Q2 2022 to -1.2 today. Four industries have already closed the gap entirely: leisure and hospitality (+4.1 pp), food services (+4.8 pp), health care (+1.7 pp), and retail (+0.5 pp).

The Economist went further, saying America’s affordability crisis is mostly a mirage. The magazine argued that real wages have marched steadily upward for the past decade and that the pandemic inflation spike didn’t interrupt that trend. Their conclusion: “The notion that Americans can afford less than they used to is wrong.”

Schrager makes a sharper distinction about who is actually struggling. For the bottom quartile, real wages are not rising as fast. For the middle class, real wages haven’t kept pace with some critical goods and services. But many of the most vocal complaints about affordability come from young childless households in large metro areas—people complaining, she writes, about “the trappings of affluence.” The hardship is real for some. The crisis framing is wrong for most.

2. Tell That to the People Skipping Meals (EPI, Century Foundation, Mike Konczal)

The averages are hiding a disaster. Low-wage workers lost ground in 2025. A third of Americans are skipping meals. The “crisis” framing is the accurate one.

Low-wage workers saw their real wages decline in 2025, reversing five years of incredible growth. Average monthly job gains collapsed. Unemployment rose to 4.4% in December 2025 from a low of 3.4% in April 2023. If low-end wages had grown in line with productivity since 1979, the 10th-percentile hourly wage would be $21.04—45% higher than it is now.

One in three Americans skipped a meal to save money in 2025, up from one in four in the prior survey. Another 29% dipped into savings. Twenty-nine percent reduced their savings rate. Twenty-eight percent are using credit cards more. Americans increasingly can’t afford the basic building blocks of a healthy, stable life—families skipping doctor visits, forgoing medication, pulling back on groceries, turning to risky financial tools to make ends meet.

So the “vibecession” is a real economic phenomenon, not a perception problem. When the share of income devoted to essentials rises, welfare falls—even if total income keeps pace with total prices. His argument: “The first step is to believe that what people have been screaming about their lives for the past several years actually exists.” Harvard economist Stefanie Stantcheva adds a mechanism: employers don’t automatically give workers raises when inflation is high. Workers have to fight for them. And more often than not, they don’t.

3. Housing Ate the Whole Argument (Glaeser & Gyourko/Brookings, Harvard JCHS, Jerome Powell)

Even if wages kept pace with prices overall, housing didn’t get the memo. The supply crisis is structural, decades in the making, and getting worse.

Home prices have risen 60% since 2019, and the price-to-income ratio for the median home is now 5x median household income. Monthly mortgage payments on the median-priced home hit $2,570 for first-time buyers—requiring an annual income of at least $126,700. The share of first-time home buyers dropped to 21% in 2025, down from 44% in 1981. The median age for a first-time buyer hit a record 40. And we have more homeless than ever.

You need $33.63 an hour for a modest two-bedroom. But the federal minimum wage is $7.25. Almost half of all U.S. workers earn less than what’s required to afford a one-bedroom rental. And the racial gap is stark: only 7% of Black renters and 11% of Hispanic renters can afford payments on the median-priced home.

The reason is simple: not enough housing. The annual growth rate of U.S. housing slowed from 4% in the 1950s to 0.6% in the 2010s. If the housing stock had expanded from 2000 to 2020 at the same rate as 1980 to 2000, there would be 15 million more units. And Sun Belt cities that once offered affordable alternatives—Phoenix, Miami, Dallas—are now pricing like coastal markets.

Where This Lands

The “crisis is a mirage” camp has the aggregate data. The “crisis is real” camp admits the aggregate data but has the grocery receipts and the skipped medications for too many individual Americans. And the housing camp has the number that swallows everything else: 60% price increases, a nearly 4-million-unit housing shortfall, and a Fed chair who admits recovery will take years. What we’re really arguing about is whether an economy works when the averages look fine but a third of the country is skipping meals and nobody under 40 can buy a house.

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