Navigating The Affordability Crisis
The majority of Americans when asked what issue they are most concerned about heading into 2026 has been that of affordability. While a broad term and defined uniquely by each household or individual, the fact of the matter is prices have been high across the board and not limited to living essentials, food, fuel, housing, utilities, healthcare, drugs and insurance costs have been consistently on the rise with seemingly no predictable slowing in sight for the past half decade. While inflation has remained flat on average compared to last year (2.7% 2025 vs 2.9% 2024) prices in the aforementioned sectors continue to rise putting consumers in a tighter spot financially, with a grim economic outlook towards the future. While consumer spending has remained consistent and higher this holiday season when compared to 2024, consumer sentiment has dropped with the latest surveys showing outlook being bleak, at its lowest since April.
Much of the affordability issue so many Americans are voicing, has been primarily caused by the private sector behaviors. Corporations continue to squeeze the consumer at every opportunity maximizing profits, and appeasing shareholders. However, the rate at which this is happening in recent years has never been higher, and Americans are finally starting to put their hands up and say “enough”.
Let’s take a look at an example of this. Utilities are a good example, exempt from a lot of extrinsic factors such as viruses, tariffs or supply chain issues; the top 3 “causes” or weathervanes for the price hikes. Electricity average prices in the US per kw since 2021 have gone up over 68%. That’s a higher cumulative increase in price in just 4 years compared to the last 50 years total. Is the demand for electricity higher, yes, but not over double since covid. Utility companies charge what they can because they can, so long as the population pays their bills why lower them. Oil, coal, and water prices have stabilized, some have gotten cheaper year to year yet the end product is constantly rising disproportionally.
The costs for commodities, wheat and corn are almost even compared to this time 4 years ago, and soybeans are down 2%. Yet the price for the various products made up of such essential commodities on store shelves are up significantly far out pacing the cumulative inflation rate.
If tariffs were the issue the price for the underlying commodities would have increased over this past year over inflation as well, the counter to this is the majority of essential commodities are produced domestically and are not as affected by tariffs, which is correct and further solidifies this position that price hikes, far out pacing inflation, on the American people are done deliberately by corporations and occurring due to intrinsic factors as opposed to external ones.
What we’re seeing now as what started during covid; the exploitation of the consumer, where corporations continue to press the people for cash under all the apuses of inflation, covid, tariffs, foreign wars etc. corporations will raise prices in every sector or industry until the consumer stops paying for them, and we are witnessing it these days on an accelerated scale compared to previous decades.
So how have they been able to get away with it to such an extent? Continue to raise prices at a faster rate than the majority of US history? The answer: credit and debt.
US consumer debt is astronomical and continually climbing. As of October 2025, total U.S. consumer debt reached approximately $18.09 trillion, that’s a number 78% of total annual US GDP and has constantly been climbing every year. Credit cards are the primary source of the increased debt, but the consumer has been able to continually spend due to the advent of the buy-now-pay-later services such as Klarna, and Afterpay. The global Buy Now, Pay Later (BNPL) payment market is projected to grow by 13.7% annually, reaching an estimated US$560.1 billion in 2025. Between 2021 and 2024, the sector experienced remarkable expansion, recording a Compound Annual Growth Rate (CAGR) of 21.7%.
With the consumer having this accessible increase of “buying power” as compared to previous eras, they have proven to be surprisingly resilient and when businesses see an individual with purchasing power, they will do what they can to earn it, they have been exploiting this at an alarming and some may argue, a dangerous rate.
The question is how and when does this end, of course the consumer can’t borrow an unlimited amount of cash forever and that is indeed correct. Eventually defaults will occur and the spending will slow down, and prices decline due to lack of demand. The question remains, when and how quickly. I’d argue the decline is already starting, listen to the consumer, affordability is top of mind for Americans, debt is mounting and people are starting to feel it. Statistics show 95% of purchases so far this holiday season were financed and that trend is only going to continue.
The warning signs and red flags are everywhere and when a slowdown occurs or billions of dollars in defaults it will lead to lenders tightening up eligibility requirements for borrowers as what happened post 2008 housing crisis on mortgages but this time on smaller loans or debt instruments such as credit card eligibility and unsecured financing.
Navigating this as a small business owner can be tricky, and when consumer buying power slows it will slow among all sectors. Big box retailers know this, that’s why we need to look at how they’re successfully operating within this environment by seizing the moment, exploiting the available debt-funded shopping spree the American consumer is on. The strategy here is to offer flexibility to consumers either for financing or incentivizing purchases with better delivery options, or discounts on up-front payments, an example might be offering 10% off paying for a year’s worth of a service as opposed to monthly etc.
In closing, as a small business owner, your boss is the consumer, listen to what they are saying, how they feel and how they like to act, i.e. spend, adaptability is key to longevity.
To gain personalized guidance for your business on this topic and others contact us.
- Vince Calace
Founder - Venture Business Development