If you're wondering whether the economy is doing well or poorly, the answer increasingly depends on which economy you're talking about. A Bank of America Institute study released last week found that nearly one-quarter of U.S. households are living paycheck to paycheck, with the financial squeeze hitting lower-income families particularly hard.

The numbers paint a clear picture: roughly 24% of American households spend 95% of their income just covering necessities. That means almost nothing left over for emergency funds, retirement savings, or even the occasional splurge. It's evidence of what economists call a K-shaped recovery, where some people are zooming upward while others are stuck or sliding backward.

The Gap Keeps Growing

Here's where things get interesting, and not in a good way. While middle-income and high-income households living paycheck to paycheck have held steady, low-income households have seen their situation deteriorate. The percentage jumped from 27% in 2023 to 29% in 2025.

"Higher income and lower income households are living in two different worlds," Bank of America Institute Economist Joe Wadford told CNN. That's putting it mildly.

The culprit? Wage stagnation that's hitting different income groups very differently. In October, after-tax wages increased by a measly 2% for middle-income earners and just 1% for lower-income earners. Both figures lag behind the 3% inflation rate, meaning these workers are actually losing ground. Meanwhile, high-income earners enjoyed 4% after-tax wage increases, comfortably outpacing inflation.

Wadford noted that this wage growth gap is the most extreme it's been since 2016. Gregory Daco, chief economist at EY-Parthenon, told CNN this trend underscores a "deepening affordability crisis" that "could weaken the foundation of a consumer-driven economy." When a huge chunk of the population has no money left after paying for basics, consumer spending inevitably suffers.

Real People, Real Struggles

The statistics become more concrete when you hear from people living this reality. Vanessa Jones, a 65-year-old nurse in Davenport, Iowa, took on a second job several years ago just to make ends meet. "The cost of living is way too high. My savings have been depleted. I haven't tapped into my retirement, but that looks like the next step," she told CNN.

Jones pushed back hard against claims that there's no affordability crisis. President Donald Trump told Fox News last week that affordability concerns are "a con job by democrats" and that "costs are way down." Jones isn't buying it. "The people claiming prices are lower are not actually buying their own groceries or trying to find the cheapest place to get their car fixed," she said. "They need to walk in our shoes."

Dreams on Hold

Austin H., a 34-year-old construction worker, echoes Jones' frustrations. "To be 34 and living paycheck to paycheck with no savings, things are pretty crappy right now," he told CNN. "We work full-time and have degrees. And we're getting nowhere."

For Austin, the affordability crisis isn't just about making it through this month. It's about the future he's not sure he can afford. "We want to own a house and start a family, but I don't know how we will ever get our feet under ourselves," he said.

The disconnect between economic data showing strong overall growth and the lived experience of millions of Americans continues to widen. When wage growth can't keep up with inflation for the majority of workers, the broader economic picture starts to look a lot less rosy.