Life is a constant juggling act for Naomi Burns and her family of six. Living an hour outside Portland, Oregon, she and her boyfriend raise four kids on his $65,000 yearly income as a traffic-control flagger. Burns stays home with the children most of the time, but to keep the family afloat, she pulls in about $1,000 a month through social media gigs and DoorDash deliveries. “He clears around $680 a week,” she explained, “but we need closer to $1,000 just to cover bills and groceries.” Public assistance isn’t an option for them, so her side hustles are the lifeline. “Without them, we wouldn’t make it.”
Burns is a master of stretching a dollar. She plans meals down to the penny, scours Safeway for sales, and stacks coupons and loyalty points—once scoring $152 in groceries for just $20. The family caps their weekly food budget at $100. On rare occasions, there’s enough left for a fast-food splurge: the kids share three $5.99 Taco Bell meals or two $5 McDonald’s combos, with Burns banking rewards points for next time. Personal indulgences? Out of the question. “Makeup? Skincare? I can’t afford it,” she said. Even with her meticulous budgeting, rising prices over the past three years keep them teetering between barely scraping by and falling short.
For decades, everyday Americans fueled the U.S. economy—and, by extension, the world’s. But inflation has chipped away at that engine, especially for low- and middle-income households. Discretionary treats like a burger or a spontaneous toy are now calculated risks; bigger expenses like vacations or new cars feel like pipe dreams. According to Moody’s Analytics, the bottom 90% of earners—those making under $250,000—now drive just 50.3% of U.S. consumer spending, down from 64% three decades ago. Meanwhile, the wealthiest are picking up the slack, but from fall 2023 to fall 2024, spending by lower- and middle-income groups shrank.
This shift has reshaped corporate playbooks. Car companies, for instance, are chasing high earners with pricier models, pushing the average new car price to nearly $50,000 and the typical buyer’s age to 52, per Cox Automotive data. KPMG’s chief economist Diane Swonk told reporters that this reliance on wealthier spenders—who shrug off price hikes—keeps inflation simmering. January 2025 clocked a 2.6% rate, above the Fed’s 2% goal, with prices up 13% since 2022 and 23% since 2020, per the consumer-price index. For families like Burns’, every percentage point stings.
Worse may be coming. Proposed tariffs could tack on $1,200 annually to the average household’s costs, warns the Peterson Institute for International Economics. Swonk flagged job losses as the real tipping point—recent federal layoffs have already axed thousands of positions, and the Trump administration’s planned cuts to aid programs could deepen the pain. “High interest rates, meant to tame inflation, hit lower- and middle-income folks hardest,” said Moody’s chief economist Mark Zandi. U.S. Treasury Secretary Scott Bessent echoed this on CNBC: “The top 10% drive nearly half of consumption. That’s a shaky balance—the bottom 50% are getting crushed.”
A Middle-Class Squeeze
Even households earning more feel the pinch. Katie Harley, a South Carolina mom of two, lives on a $140,000 family income but is slashing spending to tackle $20,000 in credit-card debt, plus student and car loans. Inspired by a “low-spend year” trend, her family cut restaurant outings from four or five times a week to twice—Mondays at Chick-fil-A, Sundays at a Mexican spot. “I used to grab a $8 Starbucks coffee without thinking,” she said. Now, she brews at home. Impulse buys at Target are history; instead, she swaps used clothes for credit at a local shop and ditched streaming services like Paramount+, Hulu, and AppleTV. “We’re saving thousands monthly,” Harley said, “and honestly, it doesn’t feel like we’re missing much.”
A Hollowed-Out Economy
These small sacrifices add up to a broader trend: all but the richest are pulling back. “The economy’s middle is hollowing out,” said Robert Frick, chief economist at Navy Federal Credit Union. A consumer sentiment survey found that 55% of the bottom third of earners feel worse off than five years ago, while 63% of the top third are thriving. Necessities like food and rent are inflating twice as fast as the overall rate, forcing lower-income families to lean on credit. Post-pandemic aid is gone, but the wealthy ride high on stable jobs, low mortgage rates, and booming 401(k)s—hello, “401(k) millionaires.”
Deloitte’s Stephen Rogers noted that middle-income shoppers are shying away from discretionary items—furniture, clothes, electronics—compared to 2021. Credit card delinquencies are spiking, and among the lowest earners, car-loan defaults hit an eight-year peak, per the New York Fed. Savings gaps widen too: high earners handle emergencies with cash, while lower-income households grow gloomier about their finances, per Morning Consult.
Corporate and Policy Signals
Wall Street’s feeling it. Chains like Domino’s, McDonald’s, and Bloomin’ Brands report softer sales as budget-conscious customers tighten their belts, prompting a pivot to value menus. Fed Vice Chair Philip Jefferson recently highlighted a spending divide—pre-pandemic, all income groups shopped alike; now, lower- and middle-income households lag. “Aggregate data looks solid,” said Treasury’s Diane Lim, “but it’s the well-off skewing the numbers.”
With GDP up 2.8% in 2024 and unemployment at 4%, the economy seems sturdy—until you zoom in. Trump’s new tariffs on Canada, Mexico, and China, rolled out in March 2025, threatening more price hikes, and rattling consumer confidence to an eight-month low, per the Conference Board. Job cuts and trade tensions amplify the unease. “When stability wobbles, lower-income families hunker down,” Swonk said. Wells Fargo’s survey backs this: 80% of households under $100,000 plan to cut spending in 2025; even 57% of high earners are bracing for leaner times. “Everyone’s making trade-offs,” said Wells Fargo’s Michael Liersch.
For Naomi Burns, Katie Harley, and millions like them, 2025 looms as a test of resilience—proof that even in the world’s biggest economy, the bottom rungs are wobbling.