NY Fed reports surge in food insecurity as US economic divide widens

The Federal Reserve Bank of New York has identified a significant rise in food insecurity among American households, a trend that helps explain deteriorating consumer sentiment despite broader macroeconomic stability. New research from the central bank indicates that food-related challenges are surging for the country’s least well-off residents, with economists describing the increase as 'remarkable' in a recent analysis.

The data, drawn from the bank’s Survey of Consumer Expectations, covers the period between October 2025 and February 2026. During this window, there were meaningful increases in the proportion of households reporting they had used savings to cover expenses, struggled to find enough food, skipped meals, or relied on food assistance. While the increases were broad-based across various demographic groups, they were disproportionately larger for non-white, lower-income, and lower-educated households, as well as those with young children.

This deterioration in household financial health contrasts sharply with the experience of wealthier Americans, who have been buoyed by rising asset values, a stable job market, and lower home borrowing costs. The findings underscore the so-called K-shaped economic divergence, where the economic fates of the wealthy and the rest of the population are moving in opposite directions. The bottom of this curve represents a significant share of the middle- and lower-income population facing elevated economic uncertainty and financial hardship.

The New York Fed attributes the current climate of pessimism and declining job-finding expectations to a combination of persistent inflation, high interest rates, and specific policy and geopolitical pressures. These include President Donald Trump’s large-scale import tax increases and energy shocks resulting from conflicts in the Middle East. The report notes that high delinquency rates for credit cards, auto loans, and student loans serve as tangible reflections of the financial stress gripping the lower end of the income spectrum.

Compounding these pressures is a shift in the labour market from the 'hot hiring' phase seen during and after the pandemic to a 'low-hire, low-fire' scenario. This transition, alongside the retreat of key government support measures, has left many households vulnerable to the high cost of living. The NY Fed suggests that the association between food insecurity and sour consumer sentiment provides a potential explanation for unusually low confidence levels at a time when hard economic data otherwise paint a more positive picture.