Roughly three-quarters of Americans say their incomes are lagging behind inflation, according to a survey conducted from May 13 to May 15. The finding follows April data showing U.S. inflation rose at an annual rate of 3.8% from a year earlier while workers' paychecks grew 3.6%, the first time since 2023 that consumer prices outpaced wage growth.

Real wages have decreased recently as the gap between prices and pay widened. In the survey, 76% of respondents reported concern about their personal finances, and 64% described the state of the economy as "very bad" or "fairly bad."

Surging energy prices accounted for 40% of the April inflation increase, according to labor data. Gasoline prices climbed by more than 28% last month from a year ago. "People are looking at higher prices across the board, and their dollar is not carrying them as far as it previously was," said Angela Hanks, chief of policy programs at The Century Foundation.

"Higher fuel costs are seeping into the price of some consumer goods," Hanks said. "People are paying more for gas to get to and from work, and it's showing up in how companies are pricing in their costs for consumers as well. All of those things together create more friction that makes it harder for businesses to hire and for the labor market to maintain its pace."

Former Federal Reserve Chair Jerome Powell pointed to energy markets and geopolitical uncertainty as factors. "In the near term, higher energy prices will push up overall inflation. Beyond that, the scope and duration of potential effects on the economy remain unclear, as does the future course of the conflict itself," Powell said.

Consumer spending, which accounts for roughly two-thirds of economic activity, has largely held up this year. Gbenga Ajilore, chief economist at the Center on Budget and Policy Priorities, said multiple pressures are building on households.

"There doesn't seem to be any progress in resolving the Middle East conflict, tariffs are still hitting consumers and businesses hard, and cuts to [food stamps] and health care are making life harder for the average household," Ajilore said. "At some point, a majority of consumers — not just low-income ones — are going to pull back their spending, and that is going to lead to lower economic growth."