Middle-income Americans are facing an economic hangover from the inflation of the last several years, and it has led to increased pessimism about their financial prospects, a new analysis finds.
A report by Primerica found that in the third quarter of 2025, just 21% of middle-income Americans believe they’ll be better off financially in the next year, while 34% believe they’ll be worse off and 33% expect their situation to remain the same.
Those figures are notably more pessimistic than the firm’s data from the third quarter of 2020 showed, when 33% of middle-income Americans thought they would be better off financially in the next year versus just 17% who thought they would be worse off and 40% expected they would be about the same.
“The inflation hangover doesn’t just tighten day-to-day budgets – it chips away at the financial foundation families work hard to build,” Primerica wrote. “For households already balancing tight budgets, even modest increases in essential costs can force tough decisions: tapping savings, adding to credit card debt or delaying retirement investments.”
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The report noted the share of middle-income households rating their personal finances as “poor” or “not so good” has risen from 32.2% in the first quarter of 2021 to a peak of 55% in the third quarter 2024, while it was 45.5% in the third quarter of 2025.
It also noted that the share of respondents who said they pay off their credit card balances in full each month has declined significantly from about 47% in the first quarter of 2021 to 29% in the third quarter of 2025, despite inflation slowing from the highs reached in 2022.
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Data from Primerica’s Household Budget Index showed that costs for necessities like food, gas and utilities are outpacing the income growth of middle-income households, as the cost of necessities is up 32.7% since January 2021 – well above the 23.5% rise in middle-income wages over that period.
As households deal with financial challenges by doing things like deferring big purchases or investments, tapping into savings or adding to credit card debt, it can have a long-term impact as families look to get back on track in terms of their financial goals.
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“Postponing contributions to retirement accounts or scaling back savings doesn’t just lose ground in the moment — it creates a widening gap that becomes harder to close over time. Even if wage growth does begin to outpace inflation, the hole left by years of higher costs can’t be filled quickly,” Primerica said.
The report also surveyed middle-income households about what aspects of their finances are sources of stress at this time, and 55% of respondents said inflation, while 47% said they were concerned about being able to cover expenses from an emergency.
Nearly half, 46%, of respondents said that debt and having enough money to enjoy day-to-day life were sources of stress, while 42% said monthly bills, and just 12% said nothing is currently stressing them financially.
