A new report from the Federal Reserve highlights a troubling reality for many households across the country. Despite broader economic growth, financial stability remains out of reach for millions of families. The Federal Reserve’s 2025 Survey of Household Economics and Decisionmaking (SHED) finds that rising costs, growing debt burdens, housing affordability challenges, and widening racial disparities continue to undermine household financial well-being.
The findings are particularly relevant for the Deep South, where many households already face persistent poverty, lower incomes, limited access to financial services, and higher barriers to economic mobility. While aggregate numbers may suggest economic improvement, the SHED report allows for a deeper look and reveals that many families remain financially vulnerable and increasingly reliant on debt to meet basic needs.
Job security concerns are growing
Economic anxiety continues to rise despite a relatively strong labor market. In 2025, 42% of adults reported that finding or keeping a job was either a minor or major concern, up from 37% in 2024. At the same time, fewer workers voluntarily left their jobs, which may indicate uncertainty about employment opportunities. Employment challenges are particularly acute for younger workers and Black households. Among adults under 30 who were not working, 15% reported that they could not find work, up from 13% in 2024 and triple the share for those over 30. Layoffs also increased nationally, rising from 6% of adults in 2024 to 7% in 2025. However, Black workers experienced significantly higher rates of job loss, with 13% reporting a layoff in 2025, nearly double the national rate, and up from 10% in 2024.
Data from the Bureau of Labor Statistics (BLS) highlights the cumulative impact of these trends through the first quarter of 2026. According to BLS data, Black workers experienced the largest increase in unemployment between the first quarter of 2025 and the first quarter of 2026, rising from 6.3% to 7.4%. Conversely, unemployment rates for white and Hispanic workers remained essentially unchanged at 3.9% and 5.4%, respectively, during the same time period.1 The racial unemployment gap, as a result, widened. In Q1 2026, the unemployment rate for Black workers was nearly double that of white workers (7.4% versus 3.9%).2
Rising costs continue to outpace financial recovery
Inflation has slowed from recent highs, but households continue to feel the effects of elevated prices. Nearly six in ten adults (58%) reported that rising costs made their financial situation worse in 2025. While this represents a slight improvement from 60% in 2024 and 65% in 2023, it remains a clear indication that affordability challenges persist. Since 2022, rising prices have consistently been the most frequently cited financial challenge among respondents.3 Concern about the cost of living has increased dramatically, with the share of respondents identifying price increases as a major challenge rising from 33% in 2022 to 53% in 2025.
For many households, especially those in the Deep South, wages have not kept pace with increases in housing, healthcare, childcare, transportation, and insurance costs.4 As a result, families are increasingly forced to choose between meeting immediate needs and saving for future goals.
Housing affordability challenges continue to intensify
Housing remains one of the largest financial burdens for American households. The share of renters who fell behind on rent reached 23% in 2025, up from 21% in 2024 and 17% in 2021. However, these aggregate numbers look very different when disaggregated by income, with 30% of renters earning less than $50,000 falling behind on their rent, compared to just 5% of those with incomes of $100,000 or more.
For homeowners, rising homeowners’ insurance costs are contributing to economic strain. The SHED report found that, nationally, 6% of homeowners went without homeowners’ insurance. In the Deep South, however, the share was 11%, with most respondents citing cost as the primary reason for going without coverage.
Even among households with insurance, cost is a concern, particularly among lower-income households. Thirty-three percent of insured homeowners earning less than $50,000 carried less coverage than they wanted because premiums were too expensive, and a full 30% reported difficulty in paying their insurance premiums (more than double the national average).
These findings mirror trends HOPE recently documented across the Deep South, where rising insurance costs are increasingly threatening housing stability and homeownership.
Debt is becoming a necessity rather than a choice
As affordability pressures mount, more households are turning to credit to cover routine expenses. National credit card balances increased 14% since 2023, reaching $1.2 trillion. Among households experiencing financial difficulty, average credit card balances increased 37%, from $6,735 in 2023 to $9,265 in 2025. By comparison, balances increased only 1% among households who reported living comfortably (from $6,248 in 2023 to $6,307 in 2025).
The report also found growing use of Buy Now, Pay Later (BNPL) products. Buy Now, Pay Later (BNPL) is a short-term financing option that allows consumers to split the cost of a purchase into a series of equal installments, typically four payments. Sixteen percent of adults reported using BNPL in 2025, representing a one-percentage-point increase from 2024 and a six-percentage-point increase from 2021. More than 1 in 10 BNPL users reported that a payment triggered an overdraft or non-sufficient funds fee.
Again, these aggregate trends diverge when looking at usage among different borrowers. For example, BNPL usage was more than twice as high among Black households (29%) as among White households (12%), representing the highest usage rate among the demographic groups analyzed. Black adults also reported the greatest difficulty managing BNPL payments. Among BNPL users, 32% of Black adults reported making a late payment, compared with 21% of White adults, the highest delinquency rate among all demographic groups.
Together, these findings suggest that rising financial pressures are driving greater reliance on credit products and then the subsequent consequence of difficulties repaying those obligations.
Economic conditions uneven across households
At the aggregate level, the share of adults reporting that they are worse off than 12 months ago has declined every year since the pandemic, making it seem like economic conditions improved over that time. However, data reveal that the benefits of recovery are not being shared equally. Among white households, the share declined from 38% in 2022 to 26% in 2025. Among Black households, however, it increased, with the share reporting worse financial conditions increasing from 22% in 2022 to 28% in 2025.
For the Deep South, where Black households represent a substantial share of the population, these disparities have significant implications for wealth building, homeownership, and economic opportunity.
Rural communities continue to face greater economic headwinds
The report also highlights differences between rural and urban communities. Adults living in rural areas were less likely than residents in urban areas to report that they were “doing okay” or “living comfortably” financially. Nearly three-quarters (74%) of adults living in metro areas reported that they were “doing ok or living comfortably financially.” But for rural communities, it is lower at 67% of adults, representing a gap that has widened over the last decade. Perceptions of local economic conditions also differed significantly. Forty-six percent of adults in metropolitan areas said their local economy was doing well while only 37% of adults in rural communities reported the same.
These findings reflect the challenges many rural communities face, including fewer employment opportunities, limited access to financial services, higher transportation costs, and aging housing stock. For rural communities across the Deep South, these structural barriers can make economic downturns and affordability pressures even more difficult to overcome.
Looking ahead
The Federal Reserve’s latest SHED report provides an important reminder that many households remain financially vulnerable despite broader economic growth. Employment insecurity, rising costs, growing debt burdens, housing instability, and widening racial disparities continue to shape economic outcomes for millions of families.
For the Deep South, these findings underscore the need for policies and investments that expand access to affordable credit, strengthen pathways to stable employment, reduce household cost burdens, and preserve affordable housing. Economic progress should be measured not only by national statistics, but by whether households have the resources and opportunity to achieve lasting financial stability.
Footnotes
- In Q1 2025, the White unemployment rate was 3.9%, and the Hispanic unemployment rate was 5.5%. In Q1 2026, the White unemployment rate was 3.9%, and the Hispanic unemployment rate was 5.4%. ↩︎
- U.S. Bureau of Labor Statistics. (2026). Employment status of the civilian noninstitutional population by race, Hispanic or Latino ethnicity, sex, and age (Table E-16). U.S. Department of Labor. Retrieved June 12, 2026, from https://www.bls.gov/web/empsit/cpsee_e16.htm ↩︎
- Federal Reserve Board. (2025). Economic well-being of U.S. households in 2024. https://www.federalreserve.gov/publications/files/2024-report-economic-well-being-us-households-202505.pdf ↩︎
- HOPE Policy Institute. (2026). New data show affordability challenges and long-term consequences for the Deep South. https://hopepolicy.org/new-data-show-affordability-challenges-and-long-term-consequences-for-the-deep-south/ ↩︎