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In recent years, the U.S. economy has split into two very different experiences for Americans, a trend often called "The Great Divergence." On one side are the wealthier households—mainly Gen X and Baby Boomers—who built up savings during the pandemic, have seen their investments grow, and work in high-paying jobs. These individuals are still spending freely on things like vacations and luxury items. On the other side, most Americans—especially Millennials and Gen Z—are struggling to keep up. Their wages have barely grown, while the prices of basics like food, rent, and gas have jumped by over 20% since 2020. As a result, many are cutting back, shopping at discount stores, and focusing only on essentials. This growing divide is changing how different groups of people live, spend, and plan for the future.

Inflation in the U.S. remains a big concern as prices for basic needs like food, housing, and energy continue to rise faster than expected. According to the latest Consumer Price Index (CPI) report, prices increased by 0.4% in August and are now 2.9% higher than they were a year ago. This is more than the Federal Reserve's target of 2% inflation. To slow inflation, the Fed has been raising interest rates, which makes borrowing more expensive for things like car loans, credit cards, and mortgages. At the same time, more people are filing for unemployment benefits, a sign that the job market might be weakening. These economic changes are making it harder for many families to afford everyday living expenses.

A recent survey shows that Americans are spending more time than ever thinking about money—almost four hours a day. For younger people like Gen Z and millennials, it’s even higher at around five hours daily. This increase in financial stress comes from rising prices, political uncertainty, and questions about interest rates. Many people feel overwhelmed by decisions about saving, spending, and planning for the future. As the cost of living keeps going up, Americans are changing how they manage money and are more focused on finding ways to stay financially secure.

As of August 2025, inflation in the U.S. is still above the Federal Reserve’s target of 2%, with the current rate at 2.7%. This is a major change from the years before the pandemic, when inflation often stayed below the target. Today, higher prices affect many parts of the economy, not just food and energy. In fact, food prices have recently become more stable, meaning they aren’t pushing inflation up as much as before. Experts believe this ongoing rise in prices is due to deeper changes in the way prices are set, along with new government spending policies and global issues like trade conflicts and tariffs. These factors suggest that higher inflation may be sticking around longer than expected.