Food Insecurity and Consumer Pessimism

Gizem Kosar, Ishva Mehta, and Wilbert van der Klaauw Current discussions regarding a bifurcated U.S. economy highlight the increasing economic divide between lower- and higher-income Americans in spending and earnings growth and wealth accumulation. While many households are doing fine and economic activity overall has been expanding at a solid pace, large segments of the population are facing high levels of economic insecurity and financial strain, and consumer sentiment on the whole has dropped to low levels. In this post, we use newly collected data from the Survey of Consumer Expectations (SCE) to update our 2020 analysis of disproportionate financial hardship experienced during the early pandemic and to investigate recent changes in food insecurity and broader economic strains. We then examine how food insecurity relates to the increase in consumer pessimism. We find a remarkable increase in food insecurity, particularly among lower-educated and lower-income households and households with young children. We document a contemporaneous increase in pessimism among the same groups, along with a sharp decline in job-finding expectations. Declining Consumer Sentiment in a K-Shaped Economy Despite solid economic fundamentals (low unemployment, historically high household net wealth, and resilient consumer spending), consumers overall have been pessimistic about their own financial circumstances and outlook. Current levels of consumer sentiment , capturing how optimistic consumers are about their personal finances and the overall economy, have fallen near or below the low levels seen during the Great Recession and pandemic. These macroeconomic indicators mask significant heterogeneity across households, supporting the notion of a “K-shaped” economy, in which consumption growth in recent years has been driven largely by higher-income and college-educated households while lower-income households have seen fewer gains. The top of the K-shape reflects high and growing levels of net wealth, fueled by rising stock prices, near-peak home equity levels, and reductions in mortgage payments following the 2020-21 refinance boom. The bottom of the K-shape represents a significant share of the middle- and lower-income population experiencing elevated levels of economic uncertainty and financial hardship. Such financial stress is reflected in concerns about affordability due to the high cost of living, persistent inflation, and high interest rates, and in high delinquency rates for credit cards and auto and student loans . Lower- and middle-income households generally have experienced higher effective inflation rates, with a greater share of their spending allocated to goods that have seen prices soar since the pandemic, such as housing, groceries, and utilities, causing them to cut back on groceries. The greater financial strain due to the high cost of living, combined with the expiration of pandemic-era aid (such as expanded SNAP benefits), have led to renewed concerns about food insecurity among those at the bottom of the K-shape. New Evidence from the Survey of Consumer Expectations To provide further recent evidence on financial and food insecurity, we draw on the SCE. The SCE is a monthly internet-based survey that has been conducted by the Federal Reserve Bank of New York since June 2013. It is based on a twelve-month rotating panel of roughly 1,200 nationally representative U.S. household heads. As part of its May and June 2020, October 2025, and February 2026 surveys, the SCE included a set of targeted questions to study household financial stress and food insufficiency, as well as households’ expectations about their financial situation a year from now. Specifically, we asked household heads whether they (or someone in their household) experienced any of the following four events over the prior three months: dipped into savings or emergency accounts to cover expenses; had trouble finding enough food to eat or had kids who missed meals; received food donations from family, friends, or food banks; or received aid through SNAP. Note that eligibility for SNAP benefits is based on household income and size, and is an imperfect proxy for food insecurity. In our analysis, we pool data from the two 2020 surveys and refer to it as the June 2020 survey. As shown in the charts below, since May/June 2020, and also between October 2025 and February 2026, there have been meaningful increases in the shares of households reporting that they’d experienced the four situations described above. The increases were mostly broad-based across race, age, income, and education groups, but were generally larger for non-whites, lower-income and lower-educated households, and households with children, as detailed in the chart. Broad-Based Increases in Food Insecurity and Broader Economic Strains Since 2020 While related, our measures differ from the U.S.