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The pressures on middle class Americans are mounting, regardless of the stock market’s relentless climb higher. Yes, there is plenty of good news about corporate earnings and productivity generated by AI. There is capital investment and job creation in the building of data centers, much as the creation of our national highway system boosted the economy in the 1950s.

But we live in an economy that is two-thirds dominated by consumers. And the small fraction of wealthy shoppers will not be enough to offset the pressures on middle class Americans, who are increasingly squeezed by higher prices, housing unaffordability, and job concerns. The facts are concerning:

Auto loans: The Wall Street Journal recently posted a compelling article about car buyers who are trapped in auto loans with “negative equity.” That means they owe more than the car is worth. And when the car gets older and they want or need to trade it in, they are “upside down.” Those longer-term car loans allowed buyers to have lower monthly payments when car prices surged during the pandemic. Now the cars are aging and require expensive repairs.

The Journal report says that about 30% of borrowers in the first quarter who traded in a car to buy a new one had negative equity. Those borrowers owed about $7,200 on average before getting a new loan — a 42% jump compared with the same period five years prior. It’s a hole that only gets deeper when that negative equity is transferred into a loan on the next car.

Gasoline prices: The proof is at the pump — every time you fill up your car. It simply costs more. And even if the war in Iran is settled soon, which doesn’t look likely, supply chains to refineries have been disrupted. Higher prices will last longer than peace negotiations.

Natural gas: Amid the headline prices about oil and gasoline, few have noticed the rising cost of natural gas. It already translated into higher winter heating bills. And it will become especially noticeable during the summer air conditioning season. Recent CPI data shows that residential natural gas is up around 10-11% over a year earlier. This has nothing to do with the war, but with the rising demand for power from data centers. Natural gas powers that electricity generation!

Medical costs: As I noted in a recent column, prices for health insurance may have doubled for many people, as subsidies were reduced for the Affordable Care Act plans. Although many people dropped their insurance entirely, prices and premiums will continue to rise with fewer insureds to share the burden.

Energy-related food costs: Energy is a huge component of food manufacturing and distribution. At the factory level it is estimated to be about 15% of total operating costs. And when it comes to all those trucks carrying products, fuel (especially soaring diesel) costs are even more significant. But we might forget that for farmers, it’s estimated that energy makes up between 20% and 35% of total operating costs, depending on the crop and the geographic area.

Fertilizer: Farmers are getting a double-whammy. Not only is the fuel for their tractors rising, but the cost of fertilizer is soaring because of the shutdown in the shipping lanes. Roughly one-third of the global seaborn fertilizer normally moves through the Strait of Hormuz. So nitrogen fertilizer prices jumped between 30% and 50% in early spring, before backing off a bit.

But fertilizer must be used at the start of the planting season. That time is rapidly approaching, so even if the Strait is opened to commercial traffic, tight supplies mean higher costs for farmers (or lower crop yields). And that will translate into higher food prices.

Housing costs: Although home sales have slowed, housing prices have not come down — yet. Mortgage rates have moved higher, as the 10-year Treasury note rate has stayed elevated out of budget concerns brought on by the cost of the war. At this writing the average rate on a 30-year mortgage with 20% down is 6.4%.

The “shelter” component of the CPI rose 3.3% over the last 12 months, and that includes rents as well as ownership costs. Also, as municipalities are strained by federal cutbacks, property taxes are rising in many localities.

Put it all together and you get the feeling that inevitably “something’s gotta give” — in consumer spending and individual budgets, and maybe even in stock prices. And that's the Savage Truth.

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(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)

©2026 Terry Savage. Distributed by Tribune Content Agency, LLC.