Even middle-income folks are struggling to pay rent

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Kimberly Adams (0:47)

What's in the latest inflation reading? And it's getting tougher for more people to pay rent.

From Marketplace in Washington, I'm Kimberly Adams. It's a busy week in the world of economic data. Yesterday, we got the Joltz Report. On Friday, we'll get the Jobs Report. But today, the big news is the Personal Consumption Expenditures Price Index, or PCE. It's the Fed's preferred measure of inflation, and it came out earlier this morning. To help us dig into it, we're joined by Susan Schmidt, Portfolio Manager, Exchange Capital Resources. And Susan, we're looking at 3 tenths percent increase with PCE. Core PCE rose by two tenths percent. This is a lot slower rising prices than many analysts were expecting.

Susan Schmidt (1:31)

The number is better than what analysts were expecting. But when you annualize it, we're still showing that PCE is up 3 percent year over year. Remember that the Fed's target is 2 percent. So it still says that we have a way to go from the Fed's perspective on fighting inflation. Prices are still increasing more than the Fed would like.

Kimberly Adams (1:51)

We also got some jobs data this morning from ADP.

We added 90,000 jobs in the private sector, which was a bit of a shock for folks. But that gives us a snapshot of the labor market ahead of the federal jobs numbers out Friday.

Susan Schmidt (2:05)

Now, remember that ADP, that's the private payrolls. We get the government data on Friday. The numbers don't always align. But this is a positive reading. It shows that that labor market is just chugging along, doing well. And that's important for the Fed. Our central bank is different than the central banks for most other countries. Our Fed has two mandates. That's inflation and employment. So they need to see that employment is steady. They're certainly getting that reading now from this ADP number. And let's see what Friday holds.

Kimberly Adams (2:35)

Susan Schmidt is Portfolio Manager at Exchange Capital Resources. Thank you, Susan.

Susan Schmidt (2:40)

Thank you.

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Kimberly Adams (3:14)

We're at the end of September, which for a lot of folks means it's time to pay rent. And with rising costs across the economy, meeting those monthly payments is becoming increasingly difficult. A recent analysis from the Urban Institute finds that one in five working age renters struggled to pay rent last year. They either didn't pay in full or were late with the payment at some point in 2025

For more, we're joined by Samantha Batko, a senior fellow I'm Susan Schmidt. I'm the Director of the Office of the Urban Institute and one of the co-authors of the paper. Good morning.

Samantha Batko (3:45)

Good morning.

Kimberly Adams (3:46)

What are some of your key findings about renting in this study?

Samantha Batko (3:51)

What we're finding is that the number of renters who had problems paying rent increased between 2024 and 2025 And of particular interest is that while lower income renters remain the renters who are the most likely to report these challenges, the share of renters that are middle income reporting these challenges grew by the largest margin in that year.

Kimberly Adams (4:21)

How concerned should we be about that? Like, what does it tell us about the broader economy that those middle income households are struggling more to keep up with rent payments?

Samantha Batko (4:30)

I think that what that tells us is what we've been seeing through a lot of different economic indicators, that living in America is becoming less affordable. When you think about rent payments for a household, families have a lot of competing expenses. They have rent, they have food, they have gas for their vehicles, they have health care.

And then they have unexpected expenses, things like where there's a health care incident and they have a large bill or they have to do a car repair. And every month, households that have trouble meeting that budget ledger are going to make choices about what they spend money on or don't spend money on.