A gallon of milk costs roughly 25% more than it did in early 2020. A basic auto insurance policy costs over 50% more. Rent, electricity, even a tube of toothpaste – nearly everything in a household budget has reset to a permanently higher price. And for most Americans, paychecks have not caught up.
That gap between what things cost and what people earn is the defining finding of the Federal Reserve’s 2024 Survey of Household Economics and Decisionmaking (SHED), released in May 2025. The survey found that 53% of U.S. adults said rising prices had made their financial situation worse over the prior year, making inflation the single most commonly cited source of financial strain. A year after the SHED’s publication, the underlying problem it documented has not gone away: cumulative price increases from the pandemic era remain baked into everyday costs, and millions of households are still absorbing the hit.
Inflation slowed, but prices never came back down
Understanding why so many people feel stuck requires separating two things that are often confused: the rate of inflation and the level of prices.
Annual inflation, measured by the Bureau of Labor Statistics’ Consumer Price Index (CPI-U, all items), dropped from a peak above 9% in June 2022 to roughly 2.4% by early 2025. That cooldown was real and significant. But it did not reverse the damage already done. Between January 2020 and March 2025, the CPI-U rose by approximately 22 to 23%, according to BLS data. Prices did not spike and retreat. They spiked and stayed.
Some categories hit harder than others. Food-at-home prices climbed more than 25% over that span. Shelter costs, which account for roughly a third of the CPI basket, rose by a similar margin. Motor vehicle insurance, tracked by the BLS as a separate CPI component, surged more than 50%, driven by higher vehicle valuations, costlier repairs, and increased claims. For a household earning the median income, those increases add up to thousands of dollars a year in additional spending on basics, with less room for savings, emergencies, or anything discretionary.
The SHED captures that pressure in concrete terms. The survey asks respondents whether they could cover a hypothetical $400 emergency expense using cash or its equivalent. In the 2024 results, 37% said they could not, a figure that has actually worsened compared to the 32% who said the same in the 2022 survey. The report also asks whether people feel better or worse off financially than a year earlier. The share saying “worse off” reached 35%, matching or exceeding the highest levels recorded since the Fed began tracking the question in 2014.
Wages grew, but not enough for many households
Incomes have not stood still. Median weekly earnings for full-time workers rose about 18% between the first quarter of 2020 and the first quarter of 2025, according to BLS data. For workers in lower-wage service jobs, nominal gains were even steeper in percentage terms, boosted by minimum-wage increases in several states and a tight labor market that forced employers to raise starting pay.
But those gains were uneven, and for many households they did not outpace the cumulative rise in essentials. Renters face a particularly acute squeeze: the SHED found that renters were significantly more likely than homeowners to report difficulty covering monthly expenses. Households carrying variable-rate debt felt a separate kind of pressure from the Federal Reserve’s own interest-rate increases, which pushed the average credit card APR above 20% by late 2024, according to the Fed’s G.19 consumer credit report.
This is the tension that has defined the post-pandemic economy. By headline measures, the picture looks solid: unemployment remains low, GDP growth has been positive, and inflation is drifting toward the Fed’s 2% target. Yet more than half of adults told the Fed’s own survey that prices have made their lives harder. That is not a contradiction. It reflects the long lag between when prices jump and when household budgets fully adjust, a process that can stretch over years even when conditions are otherwise favorable.
Who is feeling it most
The SHED’s national numbers tell a broad story, but the strain is concentrated in specific groups. Lower-income households, defined in the survey as those earning less than $50,000 a year, were far more likely to report financial difficulty. Among that group, nearly half said they could not handle a $400 emergency expense without borrowing or selling something.
Geography plays a role as well. Households in regions with the steepest rent increases, particularly parts of the South and West, reported higher rates of financial stress. Age is another factor: younger adults who entered the workforce during or after the pandemic are trying to build financial stability on a cost base dramatically higher than what previous generations faced at the same career stage.
The Fed cautions against over-reading subgroup results where sample sizes are smaller, but the broad patterns align with other data. The New York Fed’s Household Debt and Credit Report has shown credit card balances and delinquency rates climbing steadily since 2023, with the sharpest increases among borrowers under 30. Rising delinquencies suggest the financial strain captured in the SHED is not just a matter of sentiment. It is showing up in actual borrowing behavior and missed payments.
What policymakers have and haven’t done
Federal Reserve officials have acknowledged the disconnect between improving inflation data and persistent household frustration. In a March 2025 press conference following the Federal Open Market Committee meeting, Fed Chair Jerome Powell noted that families care about the level of prices, not just the rate of change, a framing that mirrors the SHED’s findings. The Fed’s decision to hold interest rates steady through the first months of 2025 reflected a difficult tradeoff: cutting rates too quickly risked reigniting price pressures, while keeping them elevated continued to burden borrowers.
On the fiscal side, no major legislation targeting the cumulative price burden documented in the SHED had advanced through Congress as of mid-2025. Proposals to expand the child tax credit, cap credit card interest rates, and increase housing supply were introduced in both chambers, but none reached a floor vote. Without a coordinated policy response, adjusting to the new price level has remained largely a private burden for individual households rather than a public priority.
What the SHED reveals about the gap between data and daily life
The SHED is one of the most comprehensive snapshots of household financial health available. It surveys more than 11,000 adults annually and is designed to be nationally representative. But it measures self-reported perceptions, not actual income or spending. A respondent who says they feel “behind” may be comparing themselves to a neighbor, to their own situation five years ago, or to an expectation that never materialized. That subjectivity is a feature of the survey, not a flaw, but it means the results function as a gauge of financial sentiment rather than a precise economic measurement.
The CPI, by contrast, tracks observed prices with rigorous methodology. Together, the two datasets tell a coherent story: prices rose sharply, the pace of increases slowed, but the higher cost base persists, and most Americans feel it every time they pay a bill or fill a grocery cart. Neither dataset answers the harder question of what should be done about it.
But the 53% figure from the SHED is difficult to dismiss. When a majority of U.S. adults tell the central bank’s own survey that they feel financially worse off because of prices, it is a signal that the post-pandemic economy, for all its strengths on paper, still does not feel like a recovery for the people living in it.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
