New York Fed flags rising food insecurity as U.S. income divide deepens

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NY Fed on food insecurity

Highlights

Nearly 14% of U.S. households were food insecure in 2024, as higher food and housing costs and SNAP benefit cuts strain lower incomes.
The national average gasoline price hit $4.46 per gallon on Wednesday, up 40% year-over-year, intensifying financial pressure on lower-income households.
The New York Fed reports about one-third of households expect worse finances a year from now, with consumer sentiment reaching record lows in May.

Food costs and benefit changes strain household budgets

As reported by CNBC, the Federal Reserve Bank of New York says in a new blog post that food insecurity is rising in an increasingly bifurcated U.S. economy. The researchers, using data from the Survey of Consumer Expectations, say lower- and middle-income households are bearing the brunt of prolonged inflation because a larger share of their budgets goes to housing, food and utilities, categories where prices have climbed sharply since the pandemic.

The post says higher living costs and tighter eligibility rules for the Supplemental Nutrition Assistance Program, or SNAP, are renewing concerns about hunger among households at the lower end of the so-called K-shaped economy. Researchers add that the expiration of pandemic-era aid, including expanded SNAP benefits, has made conditions harder, while stricter work requirements for the program are further exacerbating the problem.

Nearly 14% of American households were food insecure in 2024, according to the latest report from the U.S. Department of Agriculture cited in the analysis. The New York Fed says this helps explain why many Americans feel worse off even though the economy has expanded at a solid pace since the Covid pandemic.

Uneven wealth gains weigh on sentiment

Consumer sentiment is continuing to trend downward after a series of financial shocks, and the University of Michigan Surveys of Consumers reached record lows in May. The New York Fed researchers write that households are broadly pessimistic about their finances, but that the picture varies significantly by income and wealth, reinforcing the view of a K-shaped economy.

Higher-income households have been supported by stock market gains and rising home values, assets they disproportionately own. Lower-income households, by contrast, are struggling to keep up with elevated prices, and the recent rise in gasoline costs is adding another burden, with the national average gasoline price reaching $4.46 a gallon on Wednesday, up about 40% from a year earlier, according to AAA.

The New York Fed says the top of the K reflects high and growing net wealth, while the bottom includes a substantial share of middle- and lower-income households facing economic uncertainty and hardship. Its monthly Survey of Consumer Expectations, released on May 7, also found that about one-third of households expect to be in a worse financial position a year from now.

In our earlier coverage of the New York Fed’s findings on rising food insecurity, we highlighted a marked uptick in households reporting skipped meals, difficulty affording food, and reliance on savings—especially among lower-income, lower-educated, and households with children. We also noted that this strain is paired with weaker consumer sentiment and job expectations, underscoring how a K-shaped economy is leaving many middle- and lower-income Americans feeling worse off despite resilient headline indicators.

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