• Key insight: Inflation is outpacing wages as the costs for essentials like food, housing, energy and imports place severe pressure on low-income families.
• Supporting data: Nearly one-third of households report unmanageable debt, while confidence in insurance coverage dropped to an all-time low, according to a new report from the Financial Health Network.
• Forward look: Temporary fixes such as debt relief, one-time cash injections and broader access to banking services have ultimately proved fleeting, the authors said. 

Millions of American households are struggling with financial vulnerability due to rising debt loads, dwindling savings and a surge in the cost of living, according to a new report.

The Financial Health Network found in its annual consumer trends report, released Wednesday, that 17% of U.S. households are "financially vulnerable," up from 15% a year ago and the highest level since at least 2018, when tracking began.

The figures translate into roughly 23 million households that are now considered to be financially vulnerable, an increase of 1.8 million households from a year earlier. By contrast, the percentage of households that are considered financially healthy has stayed stagnant at 31% for the last five years. 

The Financial Health Network's survey of 7,600 respondents in April and May came before the Federal Reserve raised interest rates last week, with another rate hike expected later this year. Those rate hikes figure to further raise the cost of borrowing.

"We are seeing a troubling reversal," said Sarah Gordon, president of the Chicago-based nonprofit that conducted the survey. "For most American families financial stress is mounting."

American households have lost ground in five of eight key categories that determine financial stability, according to the report: spending less than total income; on-time bill payment; debt manageability; insurance confidence; and planning ahead. Vulnerable households struggle with all eight categories, including short and long-term savings and access to credit. 

Andrew Warren, research manager at the Financial Health Network, said President Donald Trump's One Big Beautiful Bill Act played a significant role in reducing financial stability, particularly for low-income households.

"Cuts to the federal social safety net programs — in particular changes to SNAP qualifications, and the expiration of Affordable Care Act subsidies — started affecting people in January 2026," Warren said. 

The legislation resulted in 3.5 million to 5 million people losing Supplemental Nutrition Assistance Program benefits. Roughly 3 million people lost healthcare coverage, while another 22 million, who had received temporary tax credits for healthcare coverage, saw their insurance costs more than double when the subsidies expired last year.  

For millions of families, any cushion built up in recent years has completely evaporated, Gordon said. One-time pandemic payments from the federal government had helped many households pay down existing debt and save a little, but those gains have been reversed. 

Household wealth is not static. Between 2025 and 2026, roughly 30 million households — or 23% of the nation — moved either up or down a financial health tier, consistent with prior years, the survey found. But this year, downward movement was more common than upward movement, with 16.5 million households moving down a tier, and 13.8 million households moving up. 

The share of households reporting a high level of financial stress climbed from 13% to 16% in the past year, with half of all financially vulnerable households reporting high stress, the report found.

Jennifer Tescher, the Financial Health Network's founder and CEO, said low-income households are losing the most ground. Just 31% of lower-income families spent less than their income this past year. Only 49% of low-income households paid their bills on time, a drop from 54% a year earlier. 

"This year's data all points in the same direction," Teacher said in a press release. 

In addition to benefit cuts, lower-income Americans have been hit by higher costs for food, housing, utilities and transportation, which have risen faster than wages. The war in Iran has driven up the cost of oil, which in turn has caused higher prices for food and other essential items. Tariffs on imports ranging from 10% to 25% have further pushed up the prices of essentials like clothing and groceries.  

While the Consumer Price Index tracks a broad basket of goods — including discretionary items like travel — an index of basic necessities such as housing, childcare, food and healthcare has risen at a much steeper trajectory since 2007. This "essential inflation" has frequently outstripped wage growth, leading to a persistent decline in purchasing power for consumers.

"The effective rate of inflation for lower-income households has been consistently higher than for upper-income households because they spend on certain categories of essential goods such as gas, food and rent that have risen faster than the general rate of inflation," Warren said. 

In another sign of many consumers' vulnerability, a report released Wednesday by the Urban Institute found that 20% of working-age renters reported that they were either late in paying, or didn't pay the full amount, at some point in 2025.

Another key driver of financial vulnerability is debt. The share of households reporting unmanageable debt levels rose to 31% from 29% a year ago, the Financial Health Network survey found. Unmanageable debt reached a 9-year high, hitting student-loan and auto-loan borrowers the hardest.

In addition, the Big Beautiful Bill eliminated several Biden-era student loan repayment programs that were designed to reduce payments for lower-income borrowers. Student loan debt cancellation is now treated as taxable income, creating a tax liability for borrowers who receive relief. 

"The government is directly responsible for rising student loan bills and the sharp increase in borrower financial distress," said Abby Shafroth, senior attorney at the National Consumer Law Center. "In 2026, the federal government eliminated the most affordable student loan payment plan, rolled out new, more expensive plans, and raised interest rates on new student loans."

One surprise in the results was a significant drop in consumers' confidence in insurance coverage. Just 54% of households said they were at least somewhat confident their insurance would cover them in an emergency.

"Confidence in insurance coverage is at its lowest point since we started this research," Tescher said in the release.

Concerns about insurance were evenly spread across insurance types. In the home-insurance realm, consumers are worried that their policies won't protect them when a crisis hits. The persistent threat of wildfires and flooding has led some major carriers to retreat from disaster-prone areas.

The Financial Health Network also delivered a lesson from nearly a decade of measuring financial health. It said that fragmented efforts to combat financial vulnerability produce fragmented results. 

Temporary debt relief, one-time cash injections and broader access to banking services have generated positive impacts overall, but lasting effects have proved fleeting. 

"Many of the central stakeholders most capable of sustaining positive improvements … act in isolation," the report stated. "Lasting change is possible only when actors across these sectors rally around a shared understanding of financial health and coordinate both their investments and interventions in service of advancing financial health for all."