The affordability squeeze on American households has reached a level not seen in 15 years. New data from the U.S. Bureau of Labor Statistics (BLS) show that housing and food together accounted for 46.9% of average household expenditures in 2025—the biggest share of household budgets devoted to the two essentials in 15 years—leaving little room for quality-of-life spending.

The figures come from the BLS's annual Consumer Expenditures Report, which found that the pressure point of rising essential costs grew last year. Housing expenditures climbed 5.8% compared with the previous year, while food spending increased 4.6%. Both categories outpaced overall consumer inflation, which—as measured by the Consumer Price Index for All Urban Consumers—increased 2.6% in 2025. The expenditure survey carries weight beyond the annual snapshot: the BLS draws on its data to update the category weights used to calculate the CPI, meaning that a household budget increasingly concentrated in housing and food is also reflected in how inflation itself is measured.

Housing leads the increase

The rise in spending on housing and food was particularly pronounced in housing. The average household spent $27,790 on housing in 2025, up from $26,266 in 2024. Housing was the largest single category of household spending in 2025, accounting for roughly a third of the average annual budget. The housing category covers costs related to the dwelling itself as well as utilities, furnishings, supplies and household operations, and within it shelter costs rose even more steeply. Average shelter expenditures increased 8%, spending on rented dwellings climbed 10.8%, and expenditures on owned dwellings rose 7.3%.

Food, which accounted for about 13% of the average budget, followed a similar trajectory. The average consumer spent $10,633 on food in 2025, up from $10,169 the previous year. Part of the increase was driven by an 11.7% jump in spending on meat, poultry, fish and eggs.

Consumer sentiment sinks

That disconnect between household finances and affordability has carried over into 2026, and it is visible in consumer sentiment. The University of Michigan's October consumer sentiment index sat at 48.0, showing minimal change from September's 48.1—but 10.4% lower than its October 2025 reading of 53.6. The current economic conditions index fell to 46.7 from 50.9 the previous month, a decline of 8.3%. The October reading was the second-lowest in the survey's history, following a record low of 44.8 in May. The Michigan survey is one of the longest-running gauges of U.S. consumer confidence and is widely watched as an early read on household spending behavior.

Joanne Hsu, director of the University of Michigan's Surveys of Consumers and an economist at the university, said purchasing power continued to dominate Americans' views of the economy.

"This month's decline in the Current Conditions subindex was driven entirely by buying conditions for durable goods, which plunged 18% on the basis of higher interest rates and rising concerns about the affordability of such purchases," Hsu said in a university press release. "Purchasing power continues to dominate consumer views of the economy. Sentiment is now 10% below a year ago and 15% below February, just prior to the Iran conflict."

2025's woes continue into 2026

The spending pressures documented in the BLS report have not disappeared in the new calendar year. According to The Urban Institute's October tracker, 49% of people in American families lacked the resources to cover the true costs of essential expenses and live securely in their communities.

"Affordability has become a central issue in American political discourse and in the everyday lives of millions of Americans struggling to get by and get ahead," the report read. "Political candidates as diverse as President Trump in 2024 and New York City Mayor Mamdani in 2025 focused on the high cost of necessities in their campaigns. The issue resonates with the public—as nearly four out of five Americans are pessimistic about economic conditions improving in 2026."

Housing remained a particularly significant source of pressure. According to the institute, renters are paying about $710 more per month for housing than they did in 2017, while families with two young children face an additional $6,600 in annual childcare costs compared with a decade earlier.

A Pew Research Center survey carried out between July and August found that 44% of U.S. adults experienced at least one financial hardship, whether from medical care, daily transportation costs, rent and mortgages, or food from a food bank or pantry. Among lower-income adults, that figure reached 71%, compared with 39% of middle-income adults and 13% of upper-income adults.

Higher expenses, lower incomes

The BLS report also laid bare the strain at the lower end of the income distribution. Consumers in the bottom two income quintiles—the bottom 40% of households by income, those making less than about $60,000—have higher annual expenses than income before taxes. The lowest quintile made $18,125 in pre-tax income but recorded $37,935 in annual expenditures; spending beyond pre-tax income is possible when households draw down savings or borrow to cover costs.

The BLS did acknowledge that incomes rose as well: average pre-tax income climbed 6.4% to $110,847 in 2025, faster than the 4.3% rise in average spending to $81,905.

Healthcare costs added to the burden. Americans spent 4.4% more on healthcare in 2025 than in the previous year, with average spending rising from $6,197 to $6,470. Health insurance accounted for much of the increase—average annual spending on insurance premiums climbed 6.3%, from $4,055 to $4,310. That means the average consumer spent about $540 a month on healthcare, with about two-thirds of that going to health insurance alone.

Utility bills increased as well, with electricity, natural gas, water and other service bills running Americans about $411 a month over the past year—a 4.1% increase.

Transportation spending—the second-largest component of consumer expenses in 2025—rose a modest 1.3% from the previous year. The category showed a notable divergence, however, as expenses on gasoline and other fuels actually fell 5.4%. Because the BLS report covers the calendar year 2025, the gasoline price hikes from the war on Iran are not included in the data.

Average gas prices sat at $3.10 for 2025 as a whole, according to the Energy Information Administration, compared with the agency's forecast average of $3.91 for 2026. The BLS's next annual Consumer Expenditures release, covering 2026, will provide the first full-year measure of whether essentials retained their larger share of household budgets or began to recede.