Affordability is the buzzword right now – these charts show why

As the prices of everyday goods and services continue to rise, affordability is a source of household dissatisfaction and has become a major focus of political debate in recent months.

“People are screaming about affordability,” says Martha Gimbel, executive director and co-founder of the Yale Budget Lab. “I think it’s clearly become a political flashpoint,” she said.

Inflation has slowed from a peak in 2022 of 9.1%, a nearly 40-year high as measured by the annual Consumer Price Index. In November 2025, it was 2.7%.

But the prices consumers pay on a daily basis remain much higher than they were before the coronavirus pandemic. The CPI, which measures how quickly prices of goods and services rise, has increased by 26% over the past six years.

Put another way, inflation has risen about twice as fast as the Federal Reserve’s optimal interest rate since the fourth quarter of 2019, according to Moody’s chief economist Mark Zandi.

But economists say prices are rising even faster for many items that affect consumers’ necessities and overall quality of life.

According to CPI data, this applies to categories such as housing, groceries, electricity, eating out, auto repair, and used cars, for example.

Economists say that even as inflation has slowed, prices have risen in absolute terms, but at a slower pace, because businesses generally do not cut prices.

“It’s true that wages have outpaced inflation in recent years, and our standard of living is simply higher than it was before,” Gimbel said. “On the other hand, it’s simply true that certain categories of spending are more emotional to people,” she says.

A University of Michigan poll released in December showed that high prices remain a pain point for consumers. Some 46% blame high prices for the deterioration in their personal finances, the highest percentage since the series began in the late 1970s.

But affordability is also partly influenced by the “divided” political climate, he said.

For example, a Politico poll shows a wide gap in perception between Democrats and Republicans.

About 82% of people who voted for former Vice President Kamala Harris in the 2024 presidential election said their cost of living had worsened over the past year, according to the survey. Meanwhile, 45% of President Donald Trump voters said the same.

Earlier this month, President Trump called affordability a “hoax” in a speech in Pennsylvania.

But he has also floated the idea of ​​sending a $2,000 tariff “dividend” to many households, a measure that economists say could spur inflation and worsen affordability. President Trump announced in a prime-time televised address to the nation last week that the government would send a $1,776 “Warrior Dividend” check to each U.S. military member before Christmas.

Democrats have used affordability issues to their advantage in recent elections, including the New York mayoral race and the gubernatorial races in New Jersey and Virginia.

Zandi said these election victories, combined with other factors such as tariffs imposed this year, have put Americans’ focus back on affordability after a period of softer inflation.

“What really highlighted this issue was the special election where it was very clear that people were voting based on this issue,” he said. “And I think that’s what pushed this to the top of the political discussion.”

Affordability may continue to be a top concern heading into 2026.

Enhanced premium subsidies for the 22 million Americans who buy health insurance through the Affordable Care Act marketplace are expected to end at the end of 2025, meaning premiums will more than double for the average recipient.

The price hikes since the coronavirus pandemic are a byproduct of a number of factors.

Economists say that at high levels, a mismatch between supply and demand caused prices to rise rapidly.

The government injected trillions of dollars in stimulus into the U.S. economy to support household spending, and consumer demand exploded as the economy reopened broadly in early 2021. Meanwhile, the COVID-19 health crisis has disrupted supply chains, limiting supply to meet demand. Businesses rushed to rehire workers, and wages and prices rose, especially in service-oriented sectors.

Russia’s invasion of Ukraine in 2022 further increased energy and food prices. Zandi said the affordability story has been “rekindled” recently, with tariffs putting upward pressure on prices.

But high prices are just one factor contributing to feelings of affordability, Zandi said.

He said household balance sheets, including employment, wages, assets and debt, also influence sentiment.

The job market has cooled broadly, unemployment is rising and companies are cutting back on hiring. Although interest rates have come down, credit card and auto loans are still fairly high, Zandi said, and mortgage rates are still above 6%.

While stock prices have soared, that wealth has flowed primarily to high-income households, which own a disproportionate share of such assets.

Wage growth has also fallen more rapidly for low-wage workers than for higher-income earners, according to data compiled by the Federal Reserve Bank of Atlanta.

“Not all Americans are feeling the affordability squeeze,” Zandi wrote in November. “Wealthy people’s finances are probably as good as ever.”

But households feeling such pressure don’t necessarily have to despair, Gimbel said.

“We can solve these problems,” she said. “But it takes time, and people need to feel like you’re listening to them and taking them seriously.”