Recession Grips Lower-Income Households as Affordability Crisis Intensifies

As of November 14th, 2025, the much-anticipated post-COVID recession has not yet arrived, but that does not mean all Americans are in the clear. In fact, recession-like conditions are already gripping households on the lower end of the income spectrum, putting a dark spin on the saying that the future is already here, it's just not evenly distributed.

The wealthiest Americans are driving the bulk of consumption, reigniting the discussion of the K-shaped economy. While the tendency is to think that markets might be in trouble if those big spenders pull back, the pressure felt by those on the lower rungs can have its own cascading effects. Mohamed El-Erian, chief economic adviser at Allianz, warns that the cohort of lower earners is close to a recession, raising the prominence of economic and political debate around affordability.

Faced with the price shocks of the COVID era, consumers have pushed through on the winds of government subsidies, wage growth, and a job environment where moving around meant a pay bump. However, with inflation stuck at 3%, the affordability crunch this time around does not come with economic cushions to offset the difficulties. Private-sector data is not reassuring, as layoffs hit the highest level for October in over 20 years, and job gains remain modest.