Nearly a quarter of U.S. households live paycheck to paycheck, report finds

Source: CBS News

Updated on: November 17, 2025 / 2:55 PM EST / CBS News


A growing share of lower-income Americans are struggling to get by financially as their wages fail to keep up with inflation, according to a recent analysis. Roughly 29% of lower-income households are living paycheck to paycheck, up slightly from 2024 and from 27.1% in 2023, data from the Bank of America Institute shows. The financial firm defines that as spending more than 95% of household income on necessities such as housing, gasoline, groceries, utility bills and internet service.

In 2025, nearly a quarter of all U.S. households lived paycheck to paycheck, Bank of America estimates. Several factors explain why many people are falling behind. First, the nation's inflation rate this year has edged up to an annual rate of 3% after dipping to 2.3% in April. The rise in consumer prices this year is well below their pandemic-era peak of 9.1% in 2022, but remains above the Federal Reserve's target rate of 2%.

"Inflation is picking back up again, and cost increases are picking back up again," said Joe Wadford, an economist at the Bank of America Institute, which recently examined the financial pressures facing Americans by income. "That's definitely going to put some renewed pressure on those households."

Second, the cost of groceries and other essentials is continuing to rise as lower-wage workers see their paychecks and purchasing power stagnate. In October, wages for lower-income households were up only 1% from a year ago, according to Bank of America deposit data. "The gap between their wages and expenses has just continued to widen since the beginning of the year," Wadford said. "When the cost of living is increasing 3% but your wages are only increasing 1%, you're just going to really struggle to keep up."

Read more: https://www.cbsnews.com/news/inflation-wage-growth-economy-paycheck-to-paycheck-bank-of-america/