Five Signs Americans Are Getting Squeezed This Summer

Rising prices, mounting debt and broad-based pessimism that threatens to slow the country's consumption-driven economy can be counted among the pressures that are facing Americans going into the summer of 2026.

The war in Iran has made many of these strains more acute, with elevated fuel prices taking a bigger chunk from monthly budgets and bleeding into wider data on inflation.

There remain signs of resilience in the wider economy, with unemployment stable despite slow hiring, spending solid and the stock market continuing to record new highs on the back of strong corporate earnings and a rally in tech. And those in Donald Trump's administration maintain that things are on course despite recent headwinds, and that contemporary consumer anxieties are unlikely to pose the midterm threat for Republicans that some have suggested.

"In the end, people look at their wallets and they decide how to vote, and if they look at their wallets and look at how much money they have after the increase in prices, they’re going to find that they have a lot more money,” National Economic Council (NEC) Director Kevin Hassett told ABC News on Sunday.

Signs of Consumer Stress

But for the administration's optimism, Americans themselves are expressing fears about their own personal finances and the country's economic trajectory-fears that appear to be supported by a growing body of data.

1. Price Increases Outpacing Wage Growth

According to the Department of Labor's most recent Consumer Price Index (CPI), prices were up 0.6 percent in April as the annual inflation rate surged from 3.3 percent in March to 3.8 percent-its fastest pace across either of Trump's terms. The same report found that wage growth slowed to 3.6 percent on an annual basis, marking the first time since 2023 that rising prices eliminated Americans' earnings gains.

Toward the end of 2025 and early this year, inflation had been slowing toward the Federal Reserve's 2 percent target, but this progress has been stalled as the Iran war and its impact on energy prices in particular heavily weighs on consumer price data.

According to researchers at Brown University's Watson School of International and Public Affairs, Americans have paid an additional $51.7 billion in gasoline and diesel costs since the conflict began on February 28, equivalent to nearly $400 per household. And Moody's Analytics, in findings shared with CNBC, puts this figure even higher, at $450.

2. Spending at Risk

A key casualty of rising prices, according to Moody's chief economist Mark Zandi, would be consumer spending, which is estimated to account for over two-thirds of the country's gross domestic product (GDP).

"Unless the war ends soon, financially pressed consumers will have no option but to turn more cautious in their spending, threatening the already soft economy," Zandi told CNBC.

Personal consumption expenditures (PCE) and retail sales data indicates that consumers are for now spending at healthy levels. But savings rates have slid to 2022 levels as debt burdens continue to rise, indicating that households are drawing on their financial cushions and turning to borrowing to cover costs.

Analysts and businesses have also observed signs that Americans' appetite for spending has eroded in recent months as financial stressors mount.

“We have a large fuel business, and we see in the most recent period of number of gallons that customers fill up with when they come to our fuel stations fell below 10 for the first time since 2022,” Walmart‘s chief financial officer John David Rainey said in the company’s most recent quarterly earnings call. “That’s an indication of stress.”

3. Debt and Delinquencies

As cost pressures bite, Americans are increasingly using loans to finance even everyday expenses, helping to push debt levels to record highs.

According to data released by the New York Fed in May, total U.S. household debt climbed to an all-time high of $18.8 trillion in the first quarter of 2026. Much of this is housing debt, and credit card balances dropped slightly over the period, but the rising total has coincided with an increase in late payments.

The percentage of credit card balances at least 90 days delinquent reached 13.1 percent in the first quarter, up 0.4 percent from the previous one and reaching its highest rate in 15 years.

In an interview with Fox News on Sunday, NEC Director Hassett said that these figures served as proof of the "increased stress" facing certain Americans, but maintained that late payments were not cause for concern.

"For the most part, delinquency is different from defaults, and there's not any kind of financial threat to the credit card companies," he said. Hassett added that rising debt levels could be taken as a sign of increased spending, and that Americans "are optimistic about the future."

4. Growing Signs of a K-Shaped Divide

The story of debt and softer spending both point to what analysts have increasingly diagnosed as a "K-shaped" divide in the U.S. economy, with lower-income groups tightening budgets as higher-income Americans-buoyed by gains across stocks and other assets-continue to underpin overall consumption and see their fortunes grow.

Some consider this trend a critical threat to long-term economic stability-as the country becomes increasingly reliant on a narrower, wealthier cohort-and note mounting evidence that this divide is real and deepening.

"We find that households had very different experiences with gasoline spending," researchers at the New York Fed wrote last month.

"In March, high-income households increased nominal spending the most and kept real consumption essentially unchanged, while low-income households decreased real consumption of gasoline, but still saw sharply increased nominal spending because of the rise in gas prices."

5. Confidence Plummeting

All these pressures have been cited among the reasons why consumer confidence-according to a range of surveys-is currently trending near all-time lows.

Last week, research group the Conference Board revealed that its monthly Consumer Confidence Index declined in May on the back of fears over inflation and pessimism about business and labor market conditions.

The adjacent consumer sentiment survey from the University of Michigan found that the outlook among Americans is now a record low reading of 44.8 as year-ahead inflation expectations inched up to 4.8 percent.

"The cost of living continues to be a first-order concern, with 57 percent of consumers spontaneously mentioning that high prices were eroding their personal finances, up from 50 percent last month," wrote the survey director Joanne Hsu. "Lower-income consumers and those without college degrees posted particularly strong sentiment declines; these groups are more sensitive to increases in the cost of gas and other essentials."

"Critically, consumers appear worried that inflation will increase and proliferate beyond fuel prices, even in the long run," she added.

2026 NEWSWEEK DIGITAL LLC.

This story was originally published June 2, 2026 at 2:30 AM.