Middle-income Americans are reporting increased pessimism about their near-term finances, according to a Fox Business analysis of a Primerica survey released for the third quarter of 2025. The survey shows a larger share of these households expect to be worse off in the coming year than in prior years, and many are tapping savings or carrying higher balances on credit cards.
The shift reflects what Primerica described as an “inflation hangover” in which the cost of essentials has outpaced wage gains for many middle-income families. That dynamic, the report says, could erode long-term financial security for working households, reduce consumer spending and increase reliance on credit, with consequences for economic growth and fiscal policy.
The trend matters because weakened household balance sheets can reduce spending, increase delinquency risks and widen retirement shortfalls. Those outcomes raise governance and policy questions about how officials balance inflation control, labor market support and targeted assistance to vulnerable households. This story is part of our Economy Coverage examining those tradeoffs.
Background
Primerica, a financial services firm, tracked changes in sentiment and financial behaviors among middle-income households over several years. The company cited rising costs for food, energy and utilities as primary drivers of the downturn in confidence, noting price increases since early 2021 that, in its analysis, outpaced wage growth for this group.
Inflation in the United States peaked in 2022 after pandemic-related supply disruptions and strong demand. The Federal Reserve raised interest rates repeatedly beginning in 2022 to slow inflation, and headline measures have moderated since their peak. Even so, many households continue to feel elevated cost pressures, particularly for necessities, and those pressures have pushed some to reduce savings or delay long-term investments.
Details From Officials and Records
- Outlook for next year: In the third quarter of 2025, 21 percent of middle-income respondents said they expect to be better off financially in the next year, 34 percent said they expect to be worse off, and 33 percent said they expect to be about the same, the report found.
- Comparison with 2020: By contrast, data from the third quarter of 2020 showed 33 percent expected to be better off and 17 percent expected to be worse off.
- Personal finance ratings: The share of middle-income households rating their finances as “poor” or “not so good” rose from 32.2 percent in the first quarter of 2021 to a peak of 55 percent in the third quarter of 2024, and was 45.5 percent in the third quarter of 2025, the report said.
- Credit card repayment: The portion of respondents who said they pay off their credit card balances in full each month fell from about 47 percent in the first quarter of 2021 to 29 percent in the third quarter of 2025.
- Cost versus wages: Primerica’s Household Budget Index showed necessities such as food, gasoline and utilities rose 32.7 percent since January 2021, while middle-income wages increased 23.5 percent over the same period, the firm reported.
- Sources of stress: In the survey, 55 percent named inflation as a current source of financial stress, 47 percent said they worry about covering expenses in an emergency, 46 percent cited debt or having enough money for daily life, 42 percent pointed to monthly bills, and 12 percent said nothing was stressing them financially.
Reactions and Next Steps
Primerica cautioned that postponing retirement contributions or drawing on emergency savings could widen the gap households face when attempting to repair their finances, even if wages accelerate. The firm said common coping strategies include deferring large purchases, tapping emergency savings and relying more heavily on credit, which can raise long-term costs for borrowers as interest accumulates.
Financial advisers and consumer groups cited the data as a signal that many middle-income families remain vulnerable to price shocks and interest-rate changes. Some consumer advocates have urged targeted relief for low- and middle-income households and expanded financial counseling programs to prevent longer-term damage to retirement readiness.
Policymakers face tradeoffs. The Federal Reserve continues to weigh inflation risks against labor market strength; tighter monetary policy can slow inflation but raises borrowing costs for households and businesses. Fiscal policymakers, meanwhile, must consider whether targeted measures such as emergency assistance, child care subsidies or tax relief are warranted to shore up household finances without fueling further price pressure.
Beyond immediate policy responses, lenders and employers also play roles. Employers can affect outcomes through wage decisions, benefits and retirement plan design. Lenders and credit card issuers face heightened credit risk if elevated balances and missed payments increase. Credit markets could tighten if delinquencies rise, which would have broader implications for consumer access to credit.
Analysis
The Primerica findings underscore a central economic tension: headline inflation can moderate while cost burdens for essentials remain elevated for many households. That gap between price increases and wage gains reduces disposable income, constrains consumer spending and limits the ability of households to save for retirement. Consumer spending accounts for about two-thirds of U.S. gross domestic product, so persistent weakness in household finances has macroeconomic consequences.
For governance and accountability, the data put pressure on policymakers to justify their approach to inflation, labor markets and fiscal support. Officials must explain how interest-rate policy, fiscal choices and regulatory actions will protect household balance sheets, preserve credit market stability and maintain public trust in institutions entrusted with economic stewardship.
Practically, the risks to retirement readiness are notable. Many middle-income households enter retirement with limited buffers. If this cohort reduces retirement contributions or draws down savings to meet current needs, aggregate retirement preparedness could worsen, increasing future demand for public assistance or other safety-net programs.
In short, the survey points to a fragile patchwork of household finances that matters for public safety, market stability and policy choices. Decisions by the Federal Reserve, Congress and state officials in the coming months will affect whether middle-income families can rebuild savings, manage debt burdens and sustain consumer spending without undermining price stability.
