The affordability crisis has Americans feeling every penny that leaves their wallets. And according to the U.S. Bureau of Labor Statistics, nearly half of their spending is going towards necessities like housing and food—leaving little for quality of life.
New data from the BLS’s annual Consumer Expenditures Report found that housing and food accounted for 46.9% of average expenditures in 2025. And that’s because the pressure point of rising costs of essentials grew—housing expenditures climbed 5.8% and food spending increased 4.6% compared to the previous year.
The increase in spending on housing and food was particularly pronounced in housing. The average household spent $27,790 on housing in 2025, up from $26,266 in 2024. Within housing costs—which includes costs related to the housing itself, utilities, furnishings, supplies and operations—shelter costs rose even steeper. Average shelter expenditures increased 8%, rented dwellings climbed 10.8% and expenditures on owned dwellings increased 7.3%.
Food spending also rose—the average consumer spent $10,633 on food in 2025, up from $10,169 the previous year. The increase was partly driven by an 11.7% jump in spending on meat, poultry, fish and eggs.
Meanwhile, consumer inflation—as based on the Consumer Price Index for All Urban Consumers—increased 2.6% in 2025, all while housing and food expenditures grew faster.
And that disconnect between finances and affordability has carried over into 2026—which is visible in the consumer sentiment.
The University of Michigan’s October consumer sentiment index sat at 48.0, showing minimal change from September’s 48.1—but 10.4% lower than its October 2025 reading of 53.6. The current economic conditions index also fell to 46.7 from 50.9 the previous month, a decline of 8.3%.
The October reading was the second-lowest in the survey’s history, following a record low of 44.8 in May.
Joanne Hsu, director of the University of Michigan’s Surveys of Consumers and a UM economist, said purchasing power continued to dominate Americans’ views of the economy.
“This month’s decline in the Current Conditions subindex was driven entirely by buying conditions for durable goods, which plunged 18% on the basis of higher interest rates and rising concerns about the affordability of such purchases,” Hsu said in a university press release. “Purchasing power continues to dominate consumer views of the economy. Sentiment is now 10% below a year ago and 15% below February, just prior to the Iran conflict.”
2025 woes continue in 2026
The spending pressures documented in the BLS report haven’t disappeared in the new calendar year. According to The Urban Institute’s October tracker, 49% of people in American families lacked the resources to cover the true costs of essential expenses and live securely in their communities.
“Affordability has become a central issue in American political discourse and in the everyday lives of millions of Americans struggling to get by and get ahead,” the report read. “Political candidates as diverse as President Trump in 2024 and New York City Mayor Mamdani in 2025 focused on the high cost of necessities in their campaigns. The issue resonates with the public—as nearly four out of five Americans are pessimistic about economic conditions improving in 2026.”
Housing remained a particularly significant source of pressure. According to the institute, renters are paying about $710 more per month for housing than they did in 2017, while families with two young children face an additional $6,600 in annual childcare costs compared with a decade earlier.
And according to a Pew Research Center survey carried out between July and August, 44% of U.S. adults experienced at least one financial hardship from medical care, daily transportation costs, rent and mortgages, or food from a food bank or pantry. Among lower-income adults, that figure reached 71%, compared to 39% of middle-income adults and 13% of upper-income adults.
Higher expenses, lower incomes
According to the BLS report, consumers in the bottom two quintiles of income—households making less than about $60,000—have higher annual expenses than income before taxes. The lowest quintile made $18,125 in pre-tax income, but had $37,935 in annual expenditures.
The BLS did acknowledge that incomes also rose: the average pretax income climbed 6.4% to $110,847 in 2025, faster than the 4.3% rise in average spending to $81,905.
Americans also spent 4.4% more on healthcare in 2025 compared to the previous year, from $6,197 to $6,470, with health insurance accounting for much of the increase—average annual spending on insurance premiums climbed 6.3%, from $4,055 to $4,310. That means the average consumer spent about $540 a month on healthcare, with about two-thirds of that going to health insurance alone.
Utility bills also increased as well, with electricity, natural gas, water and other service bills running Americans about $411 a month in the past year—a 4.1% increase.
Transportation spending—the second-largest component of consumer expenses in 2025—rose a modest 1.3% from the previous year. But the category shows a notable divergence as American expenses on gasoline and other fuels actually fell 5.4%. However, the BLS report covers the calendar year 2025, meaning the gasoline price hikes from the war on Iran isn’t included.
Average gas prices in 2025 sat at $3.10 for the year, according to the Energy Information Administration, compared to the agency’s forecast average $3.91 for 2026.
This story was originally featured on Fortune.com