A new report shows how close American households are to the financial edge

Business A new report shows how close American households are to the financial edge May 28, 20268:00 AM ET By  Stephan Bisaha A customer shops for produce in an H-E-B grocery store on May 11 in Austin, Texas. Brandon Bell/Getty Images hide caption toggle caption Brandon Bell/Getty Images Affordability has been a politically potent word, but an ill-defined measure of financial pain, often used as a reference to inflated prices. But new research from the Brookings Institution released Wednesday describes affordability by comparing the rising costs of essentials against family incomes. By that measure, the report found, in 2024 45.5% of U.S. households did not earn enough to cover their necessities. What's Eating America It's not shameful, it's savvy: The shoppers redefining how to save money on groceries Energy Drive slower, go electric, don't drive at all? The best options for saving gas The report concluded that a mere $1,000 hike in the annual cost of living would leave another 3 million households unable to make ends meet. That precarity is partly due to the gap between inflation and wages. In 2024, national wages saw just a small 1.3% bump, well below the rate of inflation of 2.9% that year, according to the Census Bureau. "My main takeaway is that when we talk about affordability, we've been focusing on inflation. But there's the income side of the story that we often do not talk about," said Andre Perry, the director of Brookings' Center for Community Uplift. Sponsor Message For the new report, the Brookings researchers gathered household income data for every county in the U.S. and compared those incomes with the estimated costs of necessities like food and transportation in those places. What's Eating America Diners are staying home, so this restaurant lets patrons pay what they want Housing, healthcare and childcare are especially large chunks of household budgets that families have little control over, said Hannah Stephens, a senior research assistant...