US Affordability challenges cut across every state and local election
The rising cost of living has emerged as the primary issue in the upcoming midterms.
The central driver of this has been higher oil prices, which have rippled across consumer categories such as groceries, electricity, and housing vis-a-vis elevated interest rates. Higher living costs have been exacerbated by cuts to ACA insurance subsidies, which have forced many to drop health insurance; the surge in data centers, which has heightened electricity prices; and tariffs, which have hurt Midwestern economies.
The US-Israel war with Iran has pushed up the cost of gasoline, utilities, and food, three non-discretionary categories. Low-income consumers are especially affected by rising costs as they spend a larger share of their disposable income on non-discretionary categories. Southern states and metros have been the most exposed, as they have the highest share of low-income households burdened by the high cost of necessities.
The rising interest rates that have accompanied these cost pressures have eroded housing affordability more than it had declined in prior years. Although coastal metros are most cost-burdened, no metro has escaped the material deterioration in affordability. The average household needed to earn $115,600 in income to afford median housing costs in Q3 2026, up from $111,500 in Q3 2025, and 75% more than the $66,200 needed five years ago.
Ballooning healthcare costs, data center-driven electricity price increases, and tariffs all add further cost pressures to consumers and businesses across the US. Southern states have weathered the steepest drops in ACA enrollment due to insurance subsidies cuts. Northeastern states are bearing the brunt of higher electricity costs, while manufacturing-heavy Midwestern metros are most exposed to tariffs.
