A new survey examines Americans thoughts on inflation, recession, and the American Dream.
Roughly 65% of Americans cite inflation as their top financial concern in 2025, according to Northwestern Mutual’s 2025 Planning & Progress Study.
Further, 51% believe that inflation will increase this year, compared to 25% who say it will decline and 24% who said it will stay the same.
Meanwhile, 52% claim their household income is growing slower than inflation, while only 11% say their income is growing faster than inflation and 28% contend their income is on pace with inflation.
Further, 19% of millionaires with more than $1 million in investable assets say their income is growing faster than inflation, while 40% say its growing slower and 38% indicate that its is growing at the same rate as inflation.
The survey also revealed that 44% rank inflation as the chief obstacle to achieving financial freedom. A lack of savings was next at 25% followed by the economy, debt, and taxes all at 22%.
Elevated grocery costs and childcare impact
Some 84% of respondents revealed that they have experienced elevated grocery costs in the last three months, while 68% have seen higher utility costs. Further, 60% experienced increased gas costs, while 52% had elevated housing expenses and 15% got hit with higher childcare expenses. But for younger Gen Z and Millennial parents, the childcare price sting percentage jumps to 36%.
Additionally, some 48% said rising childcare costs have the biggest impact on their household expenses, followed by housing expenses at 45%, groceries at 43%, utilities at 34% and gas at 33%.
“Houses, kids, groceries and gas: all of these higher prices are having an outsized impact on people’s budgets, and most Americans believe these challenges will grow in 2025,” John Roberts, chief field officer at Northwestern Mutual, said. “Economists often talk about how inflation is ‘sticky,’ meaning it takes time to reverse a broad economic cycle. Our study findings show that inflation is sticky at the individual level too – it remains top of mind for people, and they get reminded of it often in their daily lives. Americans can adapt, but it requires financial planning and acting intentionally now, to enjoy today without sacrificing tomorrow’s goals.”
Debt ticks down
The survey also questioned Americans on debt, and 31% called credit card bills their main source of debt. Car loans were next at 13% followed by medical debt at 8% and educational loans at 7%.
About 16% of Gen Z cited educational debt as their top concern, behind credit card debt (22%). For Millennials, medical debt 11% was a bigger concern that educational debt (10%) for the first time in this survey.
Also, 64% of Americans prioritize paying down debt while 36% prioritize savings. The percentages were roughly the same as last year.
Average debt, exclusive of mortgages, did tick down slightly in 2025 to $21,500, from $22,713 in 2024. Average debt is down significantly from $26,621 in 2020.
Home ownership, recession and the American Dream
Among other findings, 53% of non-homeowners said home ownership will never be affordable, with Millennials the most pessimistic at 58%.
Also, 48% believe the U.S. will enter a recession in the next year, down from 54% last year. This, despite the fact that the GDP could see negative growth in Q1 for the first time since 2022.
Additionally, 44% of U.S. adults say they feel financially secure, which is a slight increase from the 41% who said that last year. But it is lower than the 50% recorded in 2023. Further, 30% of Americans say they do not feel financially secure, down from 33% last year.
Finally, while nearly 72% say that home ownership is essential for building wealth, 65% believe it is possible to achieve financial security without owning a home.
“In 2025, Americans are redefining the American Dream and blazing new trails to reach it,” Roberts said. “In fact, for some, the path to building long-term wealth may lean more on the stock market than the housing market.”
