United States affordability crisis

The United States affordability crisis is an ongoing cost-of-living crisis in the US characterized by stagnant wages, high inflation, rising bills, and high interest rates. The crisis began after inflation spiked in 2021, although some elements, such as low wage growth, have been a longstanding trend.

Causes

The consumer price index (CPI) began increasing in the months following the April 2025 announcement of tariffs.[1]

Stagnant wages are often considered a long-term cause of the affordability crisis.[2][3][4] Real wages have largely not increased since the early 1980s.[3] According to the Brookings Institute, union activity and collective bargaining, which has declined since the 1980s,[5] is a big factor in the lack of wage growth.[6]

The global 2021–2023 inflation surge increased the price of necessities in the United States. To lower inflation, the Federal Reserve raised interest rates, increasing the cost of car loans, home loans, and other consumer debt.[7][8] Greatly expanded tariffs in the second Trump administration are widely considered to have continued the inflation crisis in the United States.[9][10][11]

Communities near AI data centers experience much higher electricity prices.[12][13] Reports from various economic and energy research groups have found that there is no correlation between AI data centers and increased electricity prices, and in some cases data centers cause decreased electricity prices.[14][15]

The retail price of gasoline in the US increased at the outbreak of wars in Ukraine and Iran.[16][17]

The 2026 Iran war caused a sharp increase in gas prices nationally in the United States.[17]

Rising costs

Food

A 2024 survey found 70% of Americans struggled with the cost of groceries. Three out of four said they had cut back on other expenses to afford food, particularly movies and concerts.[18]

Childcare

The cost of childcare rose 30% between 2020 and 2024 with a yearly average of $13,000 per child.[19]

Housing and utilities

The cost of utilities has risen significantly in the 2020s. Between 2020 and 2025, electricity bills rose 40%.[20] Rising interest rates and low home construction following the Great Recession have caused mortgage and rent prices to rise significantly.[19][21]

Effects

Down payments on new cars have shrunk by $600 between 2024 and 2025. Consumers increasingly relied on longer terms to lower monthly payments.[22] In March 2026, a majority of car dealerships said the economy was lowering new car sales. 74% of Americans said a new car is unaffordable.[23] According to the June Fed Beige Book, used car sales have increased, showing a shift from new car purchases to used vehicles.[24]

Responses

Government

The 21st Century ROAD to Housing Act, designed to address the housing affordability crisis in the United States, passed the Senate and House in March[25] and May 2026.[26]

New York City passed a universal childcare program in 2026 to combat rising costs.[27][28][29]

Political

Affordability was a key part of Donald Trump's 2024 presidential campaign. Trump listed "make America affordable again" as one of his 20 core promises of the campaign on his website, particularly in regard to lowering inflation.[30][31] As the Republican vice-presidential nominee, JD Vance argued the housing aspect of the affordability crisis was due to immigrants "[competing] with Americans for scarce homes."[32]

Following Zohran Mamdani's Democratic primary win in the 2025 New York mayoral election, Democrats have focused on an "affordability message." The affordability crisis focused prominently in the 2025 United States elections, especially in Virginia and New Jersey.[33] In December 2025, President Trump called the affordability crisis a "hoax."[34]

Anti-data-center sentiment in a rural Kansas neighborhood

Some American politicians have responded to the backlash to AI data centers by calling for a pause on data center development in order to find a way to address electricity affordability concerns.[35]

House representatives Delia Ramirez and Analilia Mejia introduced the Living Wage for All Act to increase the federal minimum wage, which has been stagnant since 2009. The $25 minimum wage was calculated using the MIT living wage calculator.[36] Many states have approved citizen-led ballot initiatives to raise the minimum wage in the 2020s during the affordability crisis. The raises have been intended to combat inflation.[37][38]

See also

References

  1. ↑ Dale, Daniel (December 11, 2025). "Analysis: How the White House is using misleading comparisons to make inflation sound better". CNN. Archived from the original on December 17, 2025. ● Data from BLS: "12-month percentage change, Consumer Price Index, selected categories". US Bureau of Labor Statistics. Archived from the original on December 17, 2025. ● Higher-precision data from Federal Reserve: "Consumer Price Index for All Urban Consumers: All Items in U.S. City Average (CPIAUCSL)". US Federal Reserve, St. Louis office. Archived from the original on December 17, 2025.
  2. ↑ "The Midwest is leading America's spring housing rebound because of 'buyers who are actually showing up,' Realtor.com says". Yahoo Finance. Archived from the original on May 24, 2026. Retrieved June 8, 2026.
  3. 1 2 Dube, Arindrajit (April 10, 2026). "America's Cost-of-Living Crisis Is Really a Pay Crisis". Time. ISSN 0040-781X. Retrieved June 8, 2026.
  4. ↑ Petach, Luke (May 14, 2020). "Income stagnation and housing affordability in the United States". Review of Social Economy. 80 (3): 359–386. doi:10.1080/00346764.2020.1762914. ISSN 0034-6764. Archived from the original on December 15, 2023.
  5. ↑ "As unions decline, inequality rises". Economic Policy Institute. Retrieved June 8, 2026.
  6. ↑ "In every corner of the country, the middle class struggles with affordability". Brookings. Retrieved June 8, 2026.
  7. ↑ Leicht, Angelica (March 1, 2024). "Housing Market Predictions For 2026: When Will Home Prices Drop?". Forbes Advisor. Archived from the original on May 19, 2026. Retrieved June 8, 2026.
  8. ↑ Broughel, James. "The Real Roots Of America's Affordability Problem". Forbes. Retrieved June 8, 2026.
  9. ↑ SEDENSKY, MATT (May 29, 2026). "Tomatoes become latest symbol of America's affordability squeeze". AP News. Retrieved June 8, 2026.
  10. ↑ "Small businesses face their own affordability crunch because of tariffs and health insurance costs - CBS News". www.cbsnews.com. December 18, 2025. Retrieved June 8, 2026.
  11. ↑ LaRocco, Lori Ann (February 11, 2026). "Tariff bills across U.S. states mount as affordability and Trump head for midterm elections showdown". CNBC. Retrieved June 8, 2026.
  12. ↑ "Confronting and addressing rising energy bills linked to data centers". Brookings. Retrieved June 8, 2026.
  13. ↑ Kimball, Spencer (November 12, 2025). "Skyrocketing electricity prices fuel political backlash against tech sector's AI data centers". CNBC. Retrieved June 8, 2026.
  14. ↑ "Executive Summary | Win-Win Watts". winwin.epri.com. Retrieved June 22, 2026.
  15. ↑ Simmons, Thomas J. Pyle, Daniel (March 19, 2026). "Have Data Centers Driven Up Electricity Prices?". IER. Retrieved June 22, 2026.{{cite web}}: CS1 maint: multiple names: authors list (link)
  16. ↑ Data from "Petroleum & Other Liquids / Data / Weekly U.S. All Grades All Formulations Retail Gasoline Prices". U.S. Energy Information Administration. 2026. Archived from the original on May 8, 2026.
  17. 1 2 DePillis, Lydia (April 20, 2026). "Why Gas Prices Go Up Fast and Take So Long to Fall". The New York Times. Source: AAA for national average unleaded retail gasoline prices.
  18. ↑ Lin-Fisher, Betty. "Here's how many shoppers say they're struggling with rising grocery costs". USA TODAY. Retrieved June 8, 2026.
  19. 1 2 "America's deepening affordability crisis summed up in 5 charts - CBS News". www.cbsnews.com. November 19, 2025. Retrieved June 8, 2026.
  20. ↑ Castellanos, Martina. "20 Signs There's An Affordability Crisis In America". Forbes. Retrieved June 8, 2026.
  21. ↑ "The Outlook for US Housing Supply and Affordability". Goldman Sachs. October 21, 2025.
  22. ↑ Revell, Eric (October 1, 2025). "New car down payments hit 4-year low as buyers struggle with affordability challenges". FOXBusiness. Retrieved June 9, 2026.
  23. ↑ Laing, Keith. "Car dealers say the economy is hurting sales. Buyers say it's prices". USA TODAY. Retrieved June 9, 2026.
  24. ↑ "The Beige Book: Summary of Commentary on Current Economic Conditions by Federal Reserve District" (PDF). The Federal Reserve.
  25. ↑ Bisaha, Stephan (March 12, 2026). "Senate passes bipartisan housing bill targeting large investors and easing regulations". NPR. Retrieved June 8, 2026.
  26. ↑ Bisaha, Stephan (May 20, 2026). "Bipartisan home affordability bill passes the House". NPR. Retrieved June 8, 2026.
  27. ↑ Fitzsimmons, Emma G. (November 5, 2025). "Zohran Mamdani's Top 5 Priorities as Mayor". The New York Times. ISSN 0362-4331. Retrieved June 8, 2026.
  28. ↑ "Mayor Mamdani Launches First-of-Its-Kind Child Care Website and Interactive Map". The official website of the City of New York. April 1, 2026. Retrieved June 8, 2026.
  29. ↑ "Mamdani is touting universal child care. He still needs to find staffers to run it". POLITICO. May 29, 2026. Retrieved June 8, 2026.
  30. ↑ "Agenda 47". Donald J. Trump. November 4, 2024. Archived from the original on November 4, 2024. Retrieved April 11, 2025.
  31. ↑ Jeyaretnam, Miranda (May 13, 2026). "Trump Shrugs Off Economic Impact of Iran War on Americans". Time. ISSN 0040-781X. Retrieved June 8, 2026.
  32. ↑ "JD Vance says immigration is to blame for high housing costs. Here's what the experts say. - CBS News". www.cbsnews.com. October 4, 2024. Retrieved June 8, 2026.
  33. ↑ "How Democrats Used One Word to Turn the Tide Against Trump". December 20, 2025. Retrieved June 8, 2026.
  34. ↑ Hernandez, Joe (December 11, 2025). "Trump calls affordability crisis a 'hoax.' The data tells a different story". NPR. Retrieved June 8, 2026.
  35. ↑ Stockburger, George. "Garrity calls for Pennsylvania to pause data center development". WHTM Harrisburg.
  36. ↑ McNair, Kamaron (April 29, 2026). "Democratic lawmakers introduce bill to raise federal minimum wage to $25 an hour". CNBC. Retrieved June 8, 2026.
  37. ↑ Munk, Cheryl Winokur (May 31, 2026). "In deeply red Oklahoma, minimum wage's biggest 2026 election cycle fight is about to be decided". CNBC. Retrieved June 8, 2026.
  38. ↑ "Workers across the U.S. are set for minimum wage increases in 2026. Here's where. - CBS News". www.cbsnews.com. December 8, 2025. Retrieved June 8, 2026.
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