Americans are feeling the financial squeeze—and it's about to get worse

This report came on the heels of a surprisingly large 0.5 percent increase in the Consumer Price Index in January. In February, the Consumer Price Index was up 2.8% from a year earlier, and came in below economists' expectations.

The explicit policy choices to induce "necessary economic collapse" —to quote Elon Musk—are already having an effect on the American psyche. Searches for "financial stress" are higher today (March of 2025) than they were during the height of the Great Recession.

Research from the National Library of Medicine finds that financial insecurity is strongly linked to increased anxiety and depression, particularly among low-income, unemployed, and renting households. It's also taking a toll on workplaces. A Bank of America report found that in 2024, only 42% of U.S. workers felt financially secure—the lowest rate in a decade. Meanwhile, PwC reports that 45% of financially struggling employees say money worries distract them at work, reducing productivity.

Likewise, new research from BuchhaltungsButler together with DataPulse Research suggests financial stress is reshaping workplace habits, with more workers putting in longer hours, taking on second jobs, or delaying retirement—a stark contrast to the work-life balance being pursued across the globe and in major companies.

Warning Signs: Economists Say U.S. Policies Are Fueling Economic Instability

Inflation isn't the only economic threat. Mass layoffs in the federal civil service, spending freezes, and deep budget cuts to health care, rental assistance, and other safety net programs have just recently passed the U.S. House of Representatives. If enacted, these measures could further erode confidence in the economy in the months ahead.

Dean Baker, a senior economist at the Center for Economic and Policy Research, warns that current U.S. policies—such as austerity-driven budget cuts and protectionist trade measures—are exacerbating financial instability rather than addressing core economic challenges. He argues that cuts to government support programs like Medicaid and food assistance will disproportionately harm working- and middle-class Americans.

Musk's Mass Job Cuts and Spending Freezes Spread Far Beyond Washington

The most immediate economic pain ties back to Musk's Department of Government Efficiency's (DOGE) sweeping and arbitrary layoffs in the federal government's civil service sector, along with unilateral spending freezes. So far, approximately 30,000 federal employees have lost their jobs, with projections suggesting that up to 300,000 more jobs could be eliminated—potentially making this the largest job cut in American history. Americans in all 50 states—who on average make less than their private sector counterparts—are losing their jobs, not just faceless bureaucrats in Washington, D.C.

The documented stories of public service-minded Americans being laid off by Musk are growing—from park rangers and wildfire enforcement in Oregon's national forests, aviation inspectors in Texas that help ensure safety for those flying and scientists in Florida who track hurricanes, to infectious disease researchers at the CDC in Georgia, farmers in Michigan, and disability claims processors at Veterans Affairs hospitals in Wisconsin. 

The ripple effects of these spending freezes and job cuts are already being felt by businesses and nonprofits that rely on federal grants. Thousands of jobs in the private sector that depend on federal grants have already been lost and even those who don't rely on federal funds are expressing fear and uncertainty. And nonprofits that provide human services programs to the elderly, children, and the disabled—including independent living facilities, after-school programs, and community health centers—are now  experiencing disruptions. 

Budget Cuts Could Deepen the Crisis

President Donald Trump's administration isn't just laying off workers. The House of Representatives recently passed sweeping budget reductions that would slash rental assistance, Medicaid, food assistance, and other safety net programs that millions of Americans rely on. These cuts are expected to have wide-ranging economic consequences, particularly for low-income populations, such as increased housing instability and food insecurity, according to the Center on Budget and Policy Priorities.

One of the most controversial proposals involves Medicaid funding reductions, which could push millions of Americans off their health insurance. A new report from the Kaiser Family Foundation warns that capping federal Medicaid spending would shift costs onto states, forcing them to cut enrollment, limit eligibility, or reduce health care services. Additionally, hospitals and health care providers in states facing Medicaid cuts could struggle financially, particularly in rural areas where facilities are already underfunded.

Economic confidence has never fully recovered from the COVID-19 pandemic, but data shows that Americans felt more financially secure during the pandemic's peak when direct government aid was in place, than they do today.

In early 2020, as the pandemic triggered mass layoffs and economic shutdowns, consumer sentiment plummeted. However, it rebounded when relief measures such as stimulus payments, expanded unemployment benefits, and enhanced child tax credits took effect. These policies provided millions of households with a financial cushion, stabilizing consumer spending and reducing economic uncertainty.

Once these programs expired, financial stress and poverty levels surged again. The end of rental protections, unemployment expansions, and food assistance programs left many struggling to keep up with rising costs—a trend that has continued into 2025.

With 2025 barely underway, Americans are responding to persistent inflation and Trump's inflationary policies with souring sentiment and deepening financial stress.

If Congress continues to turn a blind eye to Musk's job cuts and spending freezes, and if Congress and Trump follow through on gutting housing and health care programs that provide financial stability to millions, the economic strain on workers and families is likely to worsen. As more people lose access to stable employment, affordable housing, and essential health care, financial insecurity will cause unnecessary suffering to people, and reverberate by dragging down businesses and the broader U.S. economy.

The choices made now will determine whether the economy stabilizes or spirals further. Policymakers must decide: Will they pursue solutions that restore financial security and economic confidence, or will they continue to condone the instability allowing it to deepen and pushing more Americans to the brink?

Without action, the cost won't just be felt in household budgets—it will be etched into the foundation of the economy for years to come.