In a recent article published right before the end of 2025, The Economist described the affordability crisis as “mostly a mirage.” The article includes data about wages and grocery prices which have largely stayed in step with each other over that period coming out of Covid. There is a recognition of the impact of increased interest rates hitting the ability of Americans to buy a house, but overall there isn’t alignment with the sentiment of the popular mood. So what is really going on? Is The Economist seeing through the noise or is there something missing in this assessment?
The Core Issue isn’t Wages vs. Grocery Prices
In its assessment on affordability, The Economist focuses on wages and food prices which makes sense, but misses the core of what is really driving the pain in affordability in America. It is good to note that real wages have been headed in a very encouraging direction over that past ten years. In the overall averages across the country, its appears that wages have kept up with the overall increase in costs. This seems to show that all this noise about affordability is felt, but doesn’t reflect reality.
However, the issue sits outside of these two items. The greater challenge that I hear about from friends and is discussed on social media is the stack of expenses that are now weighing on the middle class. It is the combination of student loans, childcare, health care and now the jump in housing prices that is bringing the angst. This is what is delaying the American dream or simply making it seem impossible for people.
Student loans are particularly challenging because they tend to be higher for people who have pursued an advanced degree. This ends up taking a bite out of higher earners like counselors or physical therapists, and its taking the bite during the years correspond to young kids in the home.
Its this stack of expenses that is beating up the middle class in their 20s and 30s.
The One-Two Punch of the Covid Housing Bump and Interest Rates
The Economist does a good job recognizing the impact of the sharp rise in interest rates on the housing market, but it doesn’t seem to understand the impact of the equally sharp rise in housing prices during Covid. In some metro areas the prices have come back to earth, but in most a good portion of the price gains have remained. This has created a major shift in affordability in the course of a four year period. In a city like Spokane, where I live, this means that young people are looking at drastically different homes for a first purchase then they would have in 2019.
I see this as the major reason that average age of a first home purchase has shifted all the way up to nearly 40 years old. This is the impact of the shifts in the housing market coming out of Covid and its important to understand how significant it really is. The angst comes much more from having to shift life timelines drastically from previous expectations.
- People who hoped to buy homes are priced out
- People who want to rent in a safe area aren’t able to
- Homeowners who would want to buy a larger house are stuck
This one-two punch has shifted down the plans of almost any person who wasn’t already in a long term home on a 3% mortgage. This downgrade is what is disheartening.
The Weird Frozen Job Market is Making People Feel Stuck
While there has been an overall increase in wages over the past 10 years, anyone involved in the job market will tell you that these increases are highly variable. It is common to get a 10-20% raise when moving jobs, but only get a 3-5% bump in the same role. My experience aligns with that of The Economist that the lower end of the pay scale has seen more consistent pay bumps in order to stay maintain their hourly workforce. The challenge comes as you move up into more competitive roles.
The fact that the more substantial increases in pay tend to come with changing jobs has made the challenges in searching for new roles incredibly frustrating. While the rise of Linkedin and Indeed has made the process of identifying new roles easier, there has also been an increase in frustration at how often resumes float out never to be heard from again. It takes a lot of applying to land a new role and this is increasingly a taxing proposition for anyone who needs to make more money to stay on track financially.
In 2025, the job market took a turn due to the political chaos, tariffs and tech layoffs. Now there are less opportunities coupled with the challenges of the new job hunting environment. This isn’t an impossible situation, but its been very frustrating for most people. This is the reality of the affordability crisis. The overall numbers for average wages are going up, but the journey to get those wages is more difficult than many realize.
The Never Ending Attack of Digital Money Syphons
If you watch any program with commercials in the US, you will see a steady flow of adds for food delivery and gambling apps. Add onto this the ever expanding availability of media subscriptions and you have an incredibly challenging situation for the average American. This layer is also challenging because people know that they are choosing to funnel their money into these syphons.
Its not forced, but these convenient options grab away potential savings from people in their 20s and 30s. We are at a peak in the dangerous freedom of unlimited options. Baby boomers had to go to a casino or racetrack to lose their money gambling. Now, most people can do it in a few clicks. The normalizing of the convenience economy means additional money going out of the monthly budget.
This challenge is the easiest to overcome, but needs to be considered because of the havoc it is having on people in their 20s and 30s. All of these apps have become part of the culture and as we’ve seen with credit cards, these new spending norms are hard to undo.
Conclusion
The increase in the grocery bill simply isn’t the core reason for the angst of the affordability crisis. People are frustrated that they can’t get the bill lower, but the main reason is that the stack of housing costs, childcare, student loans and healthcare costs are making it extremely challenging to get on plane financially.
Add onto this the amount of effort it takes to find a better job and actually get hired and you can see why people are discouraged. Its as if people set out on a six mile hike and then found out halfway in that it was actually going to be 12 miles. It is a jarring shift in reality and that is why there is so much discouragement throughout the culture.