The financial mood of American households has taken a sharp turn. According to the April 2025 edition of the LIFE Survey Report, published by the Federal Reserve Bank of Philadelphia, net optimism about income fell from 37.1 percent in January to 23.4 percent in April, a drop of 13.7 percentage points—the steepest quarter-to-quarter decline since the survey began.

According to the report, “Net optimism about income decreased in April 2025 relative to January, falling from 37.1 percent to 23.4 percent, a drop of 13.7 percentage points. The magnitude of this quarter-to-quarter drop is the largest we have seen since the survey began and more than double the decrease reported in prior years; in 2023 and 2024, the January-to-April changes were -5.5 and -5.4 percentage points, respectively.”

That means that more than 75% of respondents are pessimistic about their financial future.

There are many factors that can influence the financial mood of Americans: the tariff war, anti-immigration policy and political polarization in general generate pessimism in general terms.

This plunge in confidence comes as many households are taking steps to cope with increasing financial stress.

Cutting Back and Cashing In

A total of 67.9 percent of respondents reported using at least one financial coping strategy in the past 12 months to help pay their bills. The most common actions included cutting discretionary spending (nearly half of all respondents) and cutting essential spending (one in four). Others turned to credit cards, took on extra work, or tapped retirement savings.

“In April 2025, 67.9 percent of respondents reported having used a coping strategy in the prior 12 months; this rate has been consistent since October 2023 (…). Nearly half of respondents report cutting discretionary spending, the highest rate we have seen since the survey began. A quarter of respondents reported cutting essential spending.”

The share of respondents who paid less than the full amount or skipped a monthly payment rose to 18.3 percent, the highest level since January 2024. This was most common among women, White non-Hispanic respondents, and those earning between $40,000 and $69,000 per year.

Financial Disruptions Hit Hard

Beyond active adjustments, households also faced significant disruptive financial events. In the last 12 months, 49.6 percent of respondents experienced at least one major disruption. The top three were significant nonmedical expenses (23.9 percent), significant healthcare costs (15.5 percent), and unexpected increases in housing costs (14.5 percent).

According to the reporte, “In April 2025, 49.6 percent of respondents reported experiencing at least one disruption from the list during the previous 12 months (…). The most commonly reported disruptions were significant nonmedical expense (23.9 percent), significant healthcare expense (15.5 percent), and unexpected housing cost increase (14.5 percent).”

Healthcare costs showed a particularly notable increase compared to both January 2025 and April 2024. This type of disruption was concentrated among people over 55 and those earning more than $150,000.

Are the Bills Getting Paid?

Finally, when asked whether they had been able to pay all of their bills in full that month, 21.6 percent of respondents said they were unable to pay some or any bills—still high, but slightly improved from previous surveys.

“21.6 percent of respondents in April 2025 indicated that they could not pay some or any of their bills at the time of the survey, which is the second consecutive statistically significant decrease since October 2024 (…). Respondents over the age of 66 or who are Black or Hispanic are reporting payment problems at materially higher rates than most other groups.”

Although aggregate numbers are returning to levels similar to early 2023, some communities continue to face financial strain far more severely than others.The financial mood of American households has taken a sharp turn. According to the April 2025 edition of the LIFE Survey Report, published by the Federal Reserve Bank of Philadelphia, net optimism about income fell from 37.1 percent in January to 23.4 percent in April, a drop of 13.7 percentage points—the steepest quarter-to-quarter decline since the survey began.

According to the report, “Net optimism about income decreased in April 2025 relative to January, falling from 37.1 percent to 23.4 percent, a drop of 13.7 percentage points. The magnitude of this quarter-to-quarter drop is the largest we have seen since the survey began and more than double the decrease reported in prior years; in 2023 and 2024, the January-to-April changes were -5.5 and -5.4 percentage points, respectively.”

That means that more than 75% of respondents are pessimistic about their financial future.

There are many factors that can influence the financial mood of Americans: the tariff war, anti-immigration policy and political polarization in general generate pessimism in general terms.

This plunge in confidence comes as many households are taking steps to cope with increasing financial stress.

Cutting Back and Cashing In

A total of 67.9 percent of respondents reported using at least one financial coping strategy in the past 12 months to help pay their bills. The most common actions included cutting discretionary spending (nearly half of all respondents) and cutting essential spending (one in four). Others turned to credit cards, took on extra work, or tapped retirement savings.

“In April 2025, 67.9 percent of respondents reported having used a coping strategy in the prior 12 months; this rate has been consistent since October 2023 (…). Nearly half of respondents report cutting discretionary spending, the highest rate we have seen since the survey began. A quarter of respondents reported cutting essential spending.”

The share of respondents who paid less than the full amount or skipped a monthly payment rose to 18.3 percent, the highest level since January 2024. This was most common among women, White non-Hispanic respondents, and those earning between $40,000 and $69,000 per year.

Financial Disruptions Hit Hard

Beyond active adjustments, households also faced significant disruptive financial events. In the last 12 months, 49.6 percent of respondents experienced at least one major disruption. The top three were significant nonmedical expenses (23.9 percent), significant healthcare costs (15.5 percent), and unexpected increases in housing costs (14.5 percent).

According to the reporte, “In April 2025, 49.6 percent of respondents reported experiencing at least one disruption from the list during the previous 12 months (…). The most commonly reported disruptions were significant nonmedical expense (23.9 percent), significant healthcare expense (15.5 percent), and unexpected housing cost increase (14.5 percent).”

Healthcare costs showed a particularly notable increase compared to both January 2025 and April 2024. This type of disruption was concentrated among people over 55 and those earning more than $150,000.

Are the Bills Getting Paid?

Finally, when asked whether they had been able to pay all of their bills in full that month, 21.6 percent of respondents said they were unable to pay some or any bills—still high, but slightly improved from previous surveys.

“21.6 percent of respondents in April 2025 indicated that they could not pay some or any of their bills at the time of the survey, which is the second consecutive statistically significant decrease since October 2024 (…). Respondents over the age of 66 or who are Black or Hispanic are reporting payment problems at materially higher rates than most other groups.”

Although aggregate numbers are returning to levels similar to early 2023, some communities continue to face financial strain far more severely than others.