Inflation Outpaces Wage Growth, Squeezing Households in Key U.S. Regions

Rising inflation continues to erode purchasing power, forcing more Americans to live paycheck to paycheck. Nearly a quarter of U.S. households now spend over 95% of their income on necessities, with the Northeast and Midwest bearing the brunt of the squeeze. Bank of America data reveals this marks a 0.3 percentage point increase from 2024, though the growth rate has slowed significantly from last year's surge.

The Consumer Price Index shows September's 3% annual inflation rate—the highest since January—while wages lag behind. Middle-income earners saw just 2% growth in October, with lower-income families scraping by on 1% increases. This widening gap between prices and paychecks paints a grim picture for financial stability.

Regional disparities tell a deeper story. While the Northeast and Midwest currently struggle most, the South and West face accelerating inflation that may soon eclipse other regions. The trend suggests no geographic immunity from the affordability crisis as essential costs consume ever-larger portions of household budgets.