Shaping inclusive economic growth in 2026

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Notwithstanding the roller coaster of the last eight weeks with frequent disruptions in global supply chains and bumps in inflation that have brought the cost-of-living conversation into sharper focus, recent research argues that America’s “affordability crisis” is <a href="https://www.economist.com/leaders/2025/12/30/the-truth-about-affordability" rel="noopener noreferrer" target="_blank">partly a mirage</a>. Real wages are near historic highs, especially for lower-income earners. Inflation had begun to cool significantly. And globally, if you take the long view – <a href="https://www.economist.com/graphic-detail/2026/02/03/the-world-is-more-equal-than-you-think?giftId=Y2RkNmZkZDUtM2Q0NC00YzBjLThlM2QtMzZkYmJhNzJmYzIx&amp;utm_campaign=gifted_article" rel="noopener noreferrer" target="_blank">25-year trends</a> across 194 countries – show that spending by the world’s richest 10% and the poorest 50% has more than halved since 2000, meaning global consumption is distributed more equally. By traditional economic measures, many of us should feel better off than we did a few years ago.&nbsp;But the picture is more complicated than either side suggests. Looking at the Center’s <a href="https://inclusivegrowthscore.com/market/us/" rel="noopener noreferrer" target="_blank">Inclusive Growth Score</a> data from 2017 to 2024, inclusive growth – the extent to which economic gains reach all segments of society – is trending downwards across the U.S., with more census tracts seeing declining scores than census tracts moving up – meaning that indicators of economic opportunity and mobility show to be worsening across the country.&nbsp;&nbsp;And Americans feel it.&nbsp;Across income groups, Americans consistently cite “high prices” as the primary reason they feel worse off. When economic progress bypasses entire communities and prices still sting at the register, the result isn't just frustration – it's a measurable drag on financial health.&nbsp;What is a low earner? Can we include a salary band or some sort of range?

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Why the anxiety runs deeper than the numbersThe gap between data and household experience isn’t just economic – it’s also psychological. And that psychological gap changes behavior.&nbsp;We feel the prices, not the paycheckEven though inflation had slowed over the past year, prices overall are still about 25% higher than <a href="https://www.cnbc.com/2025/12/18/cumulative-inflation-since-2020.html" rel="noopener noreferrer" target="_blank">pre-pandemic</a>. We see those numbers every time we check out at the grocery store or fill up our tank. And our brains aren’t wired to recognize that prices are rising slower – we just see that everything costs more.<a href="https://www.brookings.edu/articles/why-do-we-dislike-inflation/?utm_source=chatgpt.com" rel="noopener noreferrer" target="_blank">Research from Brookings</a> reveals a telling bias: we tend to blame price increases on external forces (corporate interests, bad policy), but we attribute wage growth to our own hard work and skills. This psychological quirk makes wage gains feel smaller, and price hikes feel larger than they objectively are.Add to that the volatility of everyday essentials – erratic spikes in eggs, energy, or childcare – and you get a perception problem. We notice what hurts (the $6 orange juice) and overlook what helps (cheaper electronics, stronger paychecks).

The cost of feeling behindHere’s the critical piece: when people feel like they can’t afford their lives – even when the macro data suggests otherwise – it undermines their financial resilience in real ways.Behavioral science tells us that when someone feels they are too far away from a goal or too much effort is required to meet said goal, they lose motivation to move toward that goal – leading to what is commonly referred to as the&nbsp;“<a href="https://compass.onlinelibrary.wiley.com/doi/epdf/10.1111/spc3.12071" rel="noopener noreferrer" target="_blank">ostrich problem</a>”.That perception drives real behavior.&nbsp;When people interpret financial signals as evidence they are “falling behind,” people delay saving, avoid investing, and&nbsp;make short-term decisions that erode long-term stability. The perceived scarcity itself becomes a barrier to building emergency funds, retirement savings, and other financial buffers that create true resilience.In other words, the affordability “mirage” creates actual financial health consequences. You can’t build resilience if you believe you’re treading water

Where the data confirms the feelingAnd the data bears this out at a community level. While personal income has grown overall, that growth has been uneven across regions, with <a href="https://www.brookings.edu/articles/metro-monitor-2025/" rel="noopener noreferrer" target="_blank">metro-level performance</a> varying significantly in terms of jobs, wages, and inclusion. Interestingly, within communities, inequality has not shifted dramatically, but differences between places have widened. Certain regions (particularly smaller or nonmetro areas) face weaker labor markets due to structural shifts in the economy, including automation and the concentration of high-skill industries elsewhere. As a result, some communities are being left behind entirely, where residents face measurably lower levels of economic mobility and opportunity tied directly to place - including jobs. The feeling of falling behind isn't just psychological — for many Americans, it reflects a geographic reality.&nbsp;But there are reasons for optimism. Entrepreneurship data tells a potentially promising story: more than half of U.S. states have seen improvements in new business formation and small business lending over the past seven years. In 2024, 5.2 million new business applications were filed — up from 3.2 million in 2017. Despite growing anxiety around the state of the economy, Americans are also building and innovating for the future. The challenge for financial services is to ensure that this entrepreneurial energy is met with the tools, confidence, and capital to sustain it.

What financial services providers should considerThis is where we have both an opportunity and a responsibility to address these issues, by leveraging emerging evidence on these topics. A few considerations:Help users have a more clear and transparent view of their financial health journey. Help customers see that affordability isn’t just about today’s grocery bill—it’s about whether they have the breathing room to build resilience. Show consumers the connection between managing perception and making progress. A review of behavioral research from the <a href="https://www.mastercard.com/news/insights/center-for-inclusive-growth-common-cents-lab/" rel="noopener noreferrer" target="_blank">Common Cents Lab</a> shows that people are more likely to take constructive financial actions when they have a higher sense of control over their finances, and when communications emphasize progress towards a financial goal.Design tools that make progress visible. Nonprofit parters like <a href="https://saverlife.org/research/personalizing-for-microentrepreneurs" rel="noopener noreferrer" target="_blank">SaverLife</a> show that even simple progress cues—streaks, milestones, and cumulative gains—can materially change saving behavior.&nbsp;For example, SaverLife’s ‘Race to $500’ program rewarded participants for reaching savings thresholds (e.g., $100, $250, $500), combined with weekly reminders and peer comparisons to reinforce engagement. These approaches—alongside cash incentives and micro-grants—have been used to help individuals build emergency savings and sustain consistent saving habits.Address volatility to build confidence. The erratic spikes in household essentials create anxiety that blocks resilience-building behaviors. Similarly, the <a href="https://www.smallfirmdiaries.org/_files/ugd/e26878_a51200f835c440308bd9e8db5fd4834a.pdf?index=true" rel="noopener noreferrer" target="_blank">Small Firm Diaries</a> shows that volatility—not low incomes—is often the biggest constraint on forward-looking decisions. When cash flows are unpredictable, people rationally avoid commitments like saving or investing. Budgeting tools, predictive insights, and smoothing mechanisms help people separate temporary shocks from long-term trends—and feel confident enough to save.&nbsp;Helping people smooth volatility, anticipate shocks, and distinguish temporary fluctuations from long‑ term trends can restore the confidence needed to engage in resilience building‑ behaviors.Data alone won’t close the gapDespite people feeling constrained by the current cost of living, the data says many Americans are financially better positioned than they think they are. But if we want to improve financial health, we need to treat these valid perceptions as a feature of the system—not a misunderstanding to be corrected.The next generation of financial tools should be designed not only on financial metrics, but to help people feel resilient enough to plan, save, and invest.&nbsp;

Across income groups, Americans consistently cite “high prices” as the primary reason they feel worse off. When economic progress bypasses entire communities and prices still sting at the register, the result isn't just frustration – it's a measurable drag on financial health.

The affordability paradox: What the data misses