The affordability crisis can be felt throughout the daily lives of millions of Americans. A recent webinar hosted by the Institute for Research on Poverty at the University of Wisconsin-Madison looked at the impacts in three specific areas: housing, energy, and essential spending.
In the webinar, “The Cost-Of-Living Crisis: Data-Driven Insights Into Housing, Energy, And Essential Spending,” Hallie Lienhardt, IRP’s Outreach and Communications Manager, framed the discussion.
“Economic uncertainty defines the current era for many U.S. households as they struggle with affordability and the challenge of stretching their budgets,” Lienhardt said. “The gap between rising costs and household resilience is especially large for families with lower incomes, as they face cost pressures relative to their income nearly three times greater than those of high-income earners. Understanding these disparities is an essential requirement for ensuring social equity and national stability.”
Sinem Haciolglu Hoke, principal economist, Federal Reserve Board, outlined four key points on the impacts on spending and consumer sentiment for working families.
- Consumer sentiment moves in tandem with lower income. The greater the decline in income, the worse households feel.
- Middle and high-income households have been fueling the strong demand for retail goods, while low-income household spending has actually been stable, almost lagging behind in the post-pandemic period.
- There have been striking inflation disparities across income levels that emerge after the 2021 period as inflation accelerated and low-income households were hit harder.
- Low-income households bore a disproportionate burden from President Trump’s tariff policy.
Gregg Colburn, Marsha & Jay Glazer Endowed University Professor, Associate Professor, University of Washington, outlined three major reasons for the affordability crisis in the housing sector, especially for people with moderate and lower incomes: policy inadequacy at the federal level; income stagnation, especially for renter and low-income households; and rising rents.
“And because housing is the biggest line item in the household budget, that presents a really big challenge for states and local jurisdictions,” Colburn said. “Because people are coming and saying, boy, you know, I'm below the federal poverty line. I can't afford housing and I'm getting no help from the federal government.”
Continued Colburn: “When we think about the housing affordability crisis for renters, and particularly low-income renters, this is the story, right? We have inadequate federal policy that supports a relatively limited number of people. We have real wages that have declined over a couple generations, and we have rents that have just continued to go up and up and up.”
Sanya Carley, Vice Provost of Climate Science, Policy, and Action, Mark Alan Hughes Faculty Director, Kleinman Center for Energy Policy, Presidential Distinguished Professor of Energy Policy and City Planning, University of Pennsylvania, argued that energy insecurity is an overlooked impact of the affordability crisis.
“We need to be incredibly mindful of the individuals, the households, and the communities that are living on the front lines of our changing energy systems, and account for some of the burdens that they face as our energy systems evolve, as well as thinking of ways to extend the opportunities and the benefits of changing energy technologies,” Carley said.
Carley highlighted recent new data showing that 13 million Americans had their power disconnected in 2024 and she said those power-related hardships weigh particularly heavy on certain demographic groups.
“What we find is a very consistent story that typically households of color are disconnected far more often than white households,” Carley said. Other at-risk groups include “households with young children, households where there are individuals who rely on electronic medical devices, and households with inefficient or deficient conditions, such as broken windows or gaps in the wall or broken refrigerator, air conditioning HVAC system,” Carley said.