![\"Middle-income](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/02\/108264897-17708967121770896709-43985483793-1080pnbcnews.jpg\")
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Signs of rising financial stress<\/a>, particularly among middle-income Americans, are warning flags about the U.S. economy’s health in 2026, experts say.\u00a0<\/p>\n Spending growth for higher-income Americans remained relatively stable between January 2025 and January 2026, according to internal transaction data from Bank of America Institute<\/a> released this week. However, spending growth slowed for lower- and middle-income households during that period.\u00a0<\/p>\n In the so-called K-shaped economy<\/a>, lower-income households are struggling, while those with higher incomes have strengthened their financial positions, mostly through stock gains and homeownership. Now, as middle-income consumers are showing signs of stress, the “K” shape is widening and beginning to look “more like the jaws of a crocodile,” said David Tinsley, senior economist at the Bank of America Institute.\u00a0<\/p>\n Zoom In IconArrows pointing outwards<\/p>\n “What we’re increasingly seeing is a divergence between higher- and middle-income households in terms of their spending growth,” said Tinsley, who added that the difference between middle-income and higher-income spending is the largest it has been since early 2022.\u00a0<\/p>\n Financial stress at a ‘tipping point’<\/p>\n New data compiled by the National Foundation for Credit Counseling also shows that an increasing number of counseled consumers are struggling to stay afloat<\/a>. The NFCC’s quarterly forecast projects that financial stress will reach an all-time high in the first quarter of this year, based on consumer behavior data from its national network of financial counseling agencies that serve more than 1 million clients.\u00a0<\/p>\n There’s “a tipping point,” said NFCC CEO Mike Croxson, where consumers don’t have enough free cash flow to make regular, fixed payments to systematically reduce their outstanding debt<\/a>. “That issue is simply creeping up the income and age ranks,” he said.<\/p>\n Financial stress is affecting more middle-income consumers ages 45 to 60, who can no longer borrow to fund their lifestyle, Croxson said. <\/p>\n “They would take on more credit to keep this spending going, but they can’t access it,” he said. “They have reached their capacity.”<\/p>\n Tax refunds may boost spending<\/p>\n Larger tax refunds may help prop up consumer spending, experts say. The Tax Foundation <\/a>estimates the average tax refund could be $300 to $800 higher<\/a> compared with a typical year. <\/p>\n That may help some people who are struggling to pay higher prices for everyday items. <\/p>\n However, some economists expect the impact will be short-term. “The underlying picture with these divergences will certainly reassert itself in the second half of this year,” Tinsley said.\u00a0<\/p>\n More from Your Money:<\/p>\n Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.<\/p>\n A key factor in closing the divide will be job growth, he said. The most recent Department of Labor report showed unexpectedly strong job growth, even as tech and other companies<\/a> have announced layoffs.<\/p>\n “It could be that the labor market reaccelerates and, you know, sort of keeps the show on the road, but, you know, there is a risk. We’re really flagging the risk,” Tinsley said. <\/p>\n SIGN UP:\u00a0Money 101\u00a0<\/a>is an 8-week learning course on financial freedom, delivered weekly to your inbox. Sign up\u00a0here.\u00a0<\/a>It is also available in\u00a0Spanish.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Signs of rising financial stress, particularly among middle-income Americans, are warning flags about the U.S. economy’s health in…\n","protected":false},"author":2,"featured_media":466616,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,122,101,147,1909,733,21217],"class_list":{"0":"post-466615","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-business-news","10":"tag-economy","11":"tag-personal-finance","12":"tag-personal-loans","13":"tag-social-security","14":"tag-tax-planning"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/466615","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=466615"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/466615\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/466616"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=466615"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=466615"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=466615"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}