Are Americans Getting Poorer (Or Just in a “Vibecession”)?

In the wake of the Ontario fire, rumours began to circulate online about similar incidents. Some social media users have speculated that fires in Columbus, OH, Bakersfield, CA, and Brooklyn, NY were also instances of corporate sabotage.

While these claims remain unproven, journalists have suggested that the fires (and Mangione’s actions) are instances of “class warfare” that reflect an increasing level of despair many lower and middle-income people feel about the US economy.

This is backed by a fair amount of data. In April 2026, the University of Michigan Consumer Sentiment Index fell to the lowest reading since the survey began. Many people are bitter and feel strongly that America’s economy isn’t working for them.

The vibecession debate

Some commentators believe that such a negative outlook is merited, but others have described the current mood as a “vibecession,” meaning that the economy is actually fairly strong, but many people (wrongly) feel like they’re falling behind.

Those experts generally point to GDP growth, low unemployment, and other metrics that suggest the economy is flourishing.

Are ordinary people out of touch with today’s economic realities, or are economists? Are workers really doing better than they think, or is there something the data isn’t telling us?

One way to gauge whether people’s lives are getting better is by looking at what they’re earning and whether their wages are outpacing inflation (the increase in costs that most economies see over time).

Inflation spiked during the COVID-19 pandemic. The consumer price index, one common way of measuring it, reached 40-year highs of around 9% in June 2022, far above the Federal Reserve’s target of around 2%. 1

Over the course of the following year, inflation cooled substantially, returning to 3% in July 2023. 1 However, when inflation slows down, that just means that the rate of increase has decreased; it doesn’t mean that prices have (or ever will) fall back to where they were.

In 2024, Jeanna Smialek of The New York Times quoted several experts who pointed out that in the wake of out-of-control inflation, it takes time for people to adjust to the new reality. It doesn’t matter to them that prices are once again climbing at a modest rate when they can remember a time when things were far cheaper.

Have earnings caught up with inflation?

When inflation rises, wages usually rise with it. However, they often lag behind by months or years.

When Smialek published her article in 2024, they hadn’t caught up. Loretta Mester, President of the Cleveland Federal Reserve, told her that many people hadn’t “made up for all of the lost ground … they’re still in a hole.”

If the Trump administration is to be believed, things have improved since then. Recent White House press releases have reported that “workers’ wages are rising rapidly” and private-sector wages are outstripping inflation. 2 3

However, the reality is more complicated. Real (inflation-adjusted) wages have still only just caught up to where they were in 2020. 4

Stephen Kates, a financial analyst at Bankrate, also pointed out to CNBC that not everyone has shared in even this modest growth. Lower-income workers are more likely to have seen their average wages fail to increase or even drop in the past several years. 5

“It feels like stagnation because it is,” he said.

This tepid growth was particularly evident in the first half of 2026. The New York Times reported that in March, the average hourly earnings in the US grew just 3.5 percent from a year before, which was the slowest pace since 2021, the height of the pandemic.

Household incomes and expenditures in the US: 2015–2026

To gauge the health of the economy, experts also sometimes look at how much people are earning versus what they’re spending.

Based on this metric, consumers are better off than they were in 2015, when the difference between their incomes and their expenditures left them with little surplus money to save or invest. However, they’re still worse off than they were in 2020 (pre-pandemic), which followed several years of strong growth.

Sources: Bureau of Economic Analysis6, United States Census Bureau789101112, US Bureau of Labor Statistics131415

The table above shows the mean value in each category for the middle 20% of the population, taken from the US Bureau of Labor Statistics.

The upshot is that US consumers are better off than they were a decade ago—but not that much better, and in recent memory, they were significantly more financially secure than they are now.

Media chatter about the US “vibecession” peaked before the 2024 election. Many economists, including Paul Krugman, suggested that there was a “disconnect” between how consumers felt about their personal financial situations and their perception of the broader economy.

“When asked, most Americans don’t say that they’re doing badly,” he wrote. “On the contrary, survey after survey finds that most voters are feeling positive about their personal financial situation, even as they insist that the economy is terrible overall.”

It’s true that surveys from that period showed that many people felt they, personally, were doing well, even though they believed the economy wasn’t. But certain economic indicators suggested that people may have been suffering more than economists recognized, and that remains true today.

What consumers are buying

The table below shows US consumers’ spending in various categories in 2015, 2019, and 2024, according to BLS data. These categories include unavoidable essentials (housing, groceries, and healthcare) and nonessentials (dining out and entertainment).

Sources: Bureau of Labor Statistics151314

The percentages are based on the mean values from the middle 20%, so they provide a reasonable representation of middle-class spending habits.

In plain English, consumers now spend more of their incomes than they used to on two essential categories: groceries and housing. Meanwhile, they’ve been steadily cutting their spending on dining out and entertainment since 2015.

In a CBSNews report on the US affordability crisis, Jeremy Tolbert, a 47-year-old web developer in Lawrence, Kansas, described how the rising prices of essentials were affecting his finances. He said that the cost of his family’s health care premiums are due to rise by 18% to $2,600 in 2026, and this will force them to cut back in other areas.

“Our food budget is going to go down,” Tolbert said. “We’re not talking about eating beans and rice, but going from a comfortable middle-class lifestyle to eating how we did when we first got out of college.”

If a professional web developer is forced to live like a college student, it raises questions about how is everyone else is surviving, and suggests that many people really are feeling financial anxiety—even if they’re doing all right on paper.

2026 fuel price increases

Following the start of the 2026 conflict with Iran, which led to the closure of the Strait of Hormuz, the cost of oil and gas spiked. This triggered a domino effect, and consumers are already noticing a corresponding rise in the prices of airfares, groceries, gasoline, and utilities.

For low-wage workers, the impact of rising gas prices can be especially bad. That’s because living in an affordable neighborhood often means accepting a longer commute to work, which is now likely to be more expensive than ever.

In May, CNN reported one particularly egregious story along those lines. Stephen Kaledecker, a recently promoted worker whose new role required heavy travel, found that his commute was costing him over $1,000 a month in fuel expenses, none of which his employer was willing to reimburse.

“It’s going to literally break me,” Kaledecker told CNN. “I look at my bank account and I’m like, ‘Okay, if I go here and do what they ask me to do, I’m not going to be able to get my prescriptions, or I’m not going to be able to pay that electric bill.’”

Rising household debt

Debt is another major liability for low-income households. Medical debt can be particularly burdensome, something that Luigi Mangione’s assassination of Brian Thompson brought to the forefront of the public discourse in 2025.

Debt can also muddle other statistics, like average expenditures. In the BLS’s data, for example, expenditures are counted for the year when the product or service was actually purchased rather than when the debt was paid.

This can make the financial health of a household look very different than it feels in reality, which may well be part of why people are feeling financially strained in 2026, even though they supposedly have more surplus money at the end of each month.

The data shows that people owe much more on average than they did in 2019 or 2015, with the mean debt per household having risen by around 27% from 2019 and 43% from 2015.

Source: Federal Reserve Bank of New York161718

Even for people who consider themselves responsible, it can be deceptively easy to become enmeshed in a cycle of high-interest credit card debt. Content creator Lana Linge told the Overcoming Overspending Podcast about how she found herself with $42,000 of credit card debt. This was despite her having previously worked in the finance industry and feeling that she had a good understanding of money.

“Even though … I consciously knew what steps to take to be financially responsible, I couldn’t act upon those. It was like I had no control,” she said.

Financial issues like Linge’s are becoming an alarmingly common story for ordinary people in the US; this is before factoring in debt from the “Buy Now, Pay Later” market, which is invisible in many official debt statistics.

Debt and the housing market

Another major talking point, when it comes to the financial lives of Americans is the cost of buying a home. In real terms, median house prices have been increasing since 2011 and have now overtaken the peak prices from the housing bubble that burst in 2006 and set off the 2008 financial crisis.

In the most expensive parts of the US, the situation is especially dire. In San Bernardino County, for instance, where Abdulkarim lived, the median house price is over $537,000 (according to Redfin).

As house prices increase, so do monthly costs for homeowners repaying their mortgages. The median monthly cost of homeownership (with a mortgage) was $2,035 in 2024, when the most recent statistics came out from the United States Census Bureau—up from $1,609 in 2019 and $1,477 in 2015.

Renting vs. homeownership

Sometimes, when the price of homeownership rises, renting starts to look better. Unfortunately, in much of the US, that isn’t the case. Rents are on the rise, too, and many people have been priced out.

According to Census Bureau statistics, the median cost of rent (in 2026 dollars) rose from $1,327 in 2015 to $1,561 in 2024. This represents a real increase of 18%.

Data from the Urban Institute, a nonpartisan think tank, shows that a new renter entering the market in 2026 can expect to pay $1,890 in rent plus $154 in utilities, totaling $2,044 per month. 19

The increasing focus on housing

The steep price of housing for both renters and owners was part of the central critique of the book Abundance by Ezra Klein and Derek Thompson’s, which was published in March 2025 and hit #1 on The New York Times bestseller list in April. 20

Their thesis, which swiftly became prominent in the media, was that the current US economy makes it relatively easy for millions of people to afford consumer goods like smartphones, but prohibitively difficult to buy or rent a home.

Notably, this is something that many measures of inflation (which look at a broad swath of expenses without prioritizing the ones that are truly unavoidable) only partially account for.

The costs of commuting and housing, which are disproportionately shouldered by lower-income workers, are some of the best illustrations of a dynamic that economists have termed the “K-shaped economy.”

This term describes two different economic paths that Americans are following:

1. The top of the K (the upward-sloping line) represents people whose wealth is growing and whose expenses remain mostly stable.
2. The bottom represents people with few assets, who are much more exposed to rising prices.

Put another way, the K-shaped economy is a financial rift that illustrates the problem of income inequality: the growing divide between the haves and the have-nots.

The Gini coefficient

One way that economists quantify the economic split in the US is via the Gini coefficient, an index that is commonly used for measuring inequality. A Gini coefficient of 0 represents perfect equality, whereas 1 represents total concentration of wealth.

The US’s Gini coefficient has been on a steady climb since 1980. Although the economy has grown enormously over the past 40 years, the gains have disproportionately been pocketed by the wealthy.

As Talmon Joseph Smith of The New York Times wrote in 2025, although “America is more prosperous than ever,” it is also “deeply unequal.”

“The share of wealth held by families in the top 10 percent has reached 69 percent,” he wrote, “while the share held by families in the bottom 50 percent is only 3 percent.”

The rising Gini coefficient doesn’t mean that everyone is worse off than they used to be in absolute terms. Again, median wages have mostly outstripped inflation, regardless of whether you look at the past ten years or the past four decades.

However, it means that, for a lot of people, their slice of the pie has gotten progressively smaller. This could be one reason for the sour outlook that many have on the economy. It’s harder to stay positive when it feels like you’re playing a rigged game, even if, when you look at the numbers, your score is higher than ever.

For people at the bottom of the K, though, it goes beyond that. Their everyday financial reality is considerably more pessimistic, and doesn’t much align with the picture painted by the official statistics based on average earners.

A growing disconnect

Some have suggested that the split between the wealthy and the working class isn’t purely financial. It’s also social and political.

In a 2025 conversation with the journalist Martin Wolf, Paul Krugman observed that the sectors of the economy that are doing well, such as the technology and AI industry, are relatively unpopular, and that most people don’t identify very strongly with their success.

“What we are seeing is booming expenditure by a really small number of gigantic companies,” he said. “They look like a bunch of incredibly powerful oligopolies, and that doesn’t really excite ordinary Americans, because it doesn’t really have anything to do with them.”

As Wolf put it in that same interview, “There’s nobody out there who is thinking, well, you know, Nvidia is doing well, and that means that anybody can make it.”

A lack of agency

The inability of most Americans to identify with their US’s success may be a symptom of the lack of agency they feel over the economy. The past few years have seen both financial upswings and downswings, with the pivotal events being the:

• Post-pandemic surge in inflation
• 2022 war in Ukraine
• Rise of generative AI
• Trump administration’s tariff policy
• 2026 conflict with Iran

The common element to all of those is that most people didn’t ask for them. They largely just happened, with people being forced to adapt to the consequences of events they had no say in.

The breaking point

Whether the US economy is shakier than it looks or people are unfairly pessimistic depends on how you look at the numbers. But however you square it, violent acts by figures like Abdulkarim and Mangione are ultimately an expression of frustration.

The same goes for the surprising outpouring of support that both received. A 2024 Economist/YouGov poll found that around 1 in 5 Americans viewed Mangione favorably, for instance—a figure that inversely correlated with age, with more people under 30 (39% to 30%) viewing him favorably.

And this support has translated into cold, hard cash. After Mangione’s arrest, messages of solidarity on social media were swiftly followed by crowdfunding campaigns on GoFundMe and other platforms. These campaigns were shut down and deleted as quickly as users could create them, sparking a game of digital whack-a-mole; however, at the time of writing, GiveSendGo hosts a fund for Mangione’s legal defense, which has amassed over $1.5 million in donations.2122

This kind of public pushback suggests that people have run out of patience. Radical defiance from figures like Abdulkarim, Mangione, and their supporters serve as a reminder of what can happen when extreme disillusionment ignites real backlash.

The numbers might tell the story that everything is fine. Nonetheless, when people feel the economy is no longer working for them, the consequences for society are usually dire.