What is happening to lower-income households in the US?

Lower-income households in the US are facing recession-like conditions and an affordability crisis, with the K-shaped economy widening and the wealthy driving consumption.

How has the job market been affected?

Layoffs have hit the highest level in over 20 years, while job gains remain modest, raising concerns about the health of the labor market.

What is the outlook for the economy as a whole?

The post-COVID recession has not yet arrived, but the pressure felt by lower-income households could have cascading effects on the economy as a whole.

Home / Business and Economy / Recession Grips Lower-Income Households as Affordability Crisis Intensifies

Recession Grips Lower-Income Households as Affordability Crisis Intensifies

14 Nov

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Summary

Recession-like conditions already affecting lower-income households
Wealthy Americans driving consumption, widening K-shaped economy
Layoffs hit highest level in over 20 years, job gains remain modest

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.