Economic conditions in low- and moderate-income communities

By Nishesh Chalise, Violeta Gutkowski, Steven Howland, Becky Kropf

August 19, 2025

This two-part report provides an overview of economic conditions in low- and moderate-income (LMI) communities and among the entities serving them based on a national survey conducted by the Federal Reserve during April and May 2025. This information is intended to help equip decision-makers with key insights for developing approaches to foster economic security in LMI communities.

This report addresses economic conditions in LMI communities, while the second report focuses on the health of the organizations that work in them. Throughout each report, we offer quotes from those serving LMI communities to provide additional context to the survey results.

Overall, entities responding to the 2025 Community Perspectives Survey reported poor economic conditions for LMI populations. Among all the sectors we asked about, housing and personal finance were among the worst performing indicators. Respondents rated employment and education conditions slightly better, driven by people’s ability to find work and the uptake of adult education programs. While the survey did not specifically ask about uncertainty, it was a broad theme raised in open-ended questions by respondents that was affecting communities, businesses, and entities negatively.

“Even among those earning just above minimum wage, the rising cost of housing, transportation and food is stretching budgets to the breaking point. Many are just one car repair or missed paycheck away from a crisis.”

Figure 1: Overview of Economic Conditions in LMI Communities

a. April 2025 (N=440)

b. Expectations for the year ahead (N=429)

Economic conditions in low- and moderate-income communities

Employment

Conditions for finding work worsened from last year. Over 40% of respondents said that conditions for finding work were poor or very poor at the time of the survey (Figure 3). Almost 30% of respondents said conditions were good. These shares showed a more dichotomous job market than last year’s survey, when 43% of respondents said conditions for finding work were neither good nor poor. Most respondents expect conditions for finding work to worsen through 2026 (Figure 4). While the availability of jobs is a top positive factor affecting conditions for finding work into the next year, the affordability of child care continues to be a significant negative factor (Table 2). Comments consistently matched challenges of child care and transportation for LMI workers with both getting and keeping jobs.

“Compounding systemic barriers, such as costly and unreliable transportation, costly and unavailable child care slots and job cuts, negatively impact upward economic mobility.”

Job quality has also worsened over the last year, with 44% of respondents saying conditions in April and May were poor (Figure 3). However, respondents were much more mixed on how they expect job quality to change over the coming year (Figure 4). Respondents were also polarized about how wages would impact job quality over the next year (Table 2). Comments continued to express that while higher-paying jobs can be found, there are significant barriers preventing LMI workers access to them, and LMI workers’ wages have not kept up with rising costs, particularly for housing.

Housing

Over 75% of respondents reported conditions for renters and homeowners to be poor or very poor (Figure 5). Most respondents do not expect conditions to improve into 2026 (Figure 6). There was little positive sentiment around expectations for rental conditions into the next year, while conditions for homeowners found some positivity in availability of downpayment assistance (Table 3). Prices and availability are significant drags on expectations for both rental and owner housing conditions.

“Folks may look for months for a unit they can afford. Or they find one they can afford and have to drive 20-30 minutes with unreliable transportation.”

Many respondents noted that affordable rental housing is often in poor condition or located far from jobs. Similarly, substandard housing is a considerable concern within homeowner conditions, and comments noted that financing and assistance were insufficient to address repair needs. Several comments also noted that insurance and taxes for LMI homeowners are continuing to grow significantly faster than their incomes, leading to heightened concern about broader financial instability. None of the comments mentioned a growing concern about foreclosures or evictions at this time.

Personal Finance

Nearly 80% of respondents said that conditions for financial stability were poor or very poor (Figure 7). A smaller share (63%) said personal credit conditions were poor or very poor, but very few said conditions were good. Conditions for both are expected to worsen over the next year (Figure 8). While access to banking and credit are both expected to be positive contributors to financial conditions into next year, cost of living and debt are expected to negatively affect conditions (Table 4). Use of alternative financial products like payday loans is also highly ranked as a negative factor for conditions in the next year.

“Many in the community lack any substantial savings, seemingly due to their low wages and high cost of living.”

Comments were nearly entirely negative and mirrored the ranked negative factors. However, aside from concerns about continued cost-of-living increases, from wages that have not kept up with inflation and from accumulating debt, comments also brought up increasing economic uncertainty and concerns about job stability. Those comments typically also coincided with concerns about cuts to social support programs and how LMI populations will weather economic shock in the near term.

Small Business

Almost half of survey respondents rated small-business operating conditions as poor or very poor (Figure 9), and nearly two-thirds expect conditions to worsen into 2026. While the top positive factor was availability of technical assistance, the second-highest rating was “no positive factors” (Table 5), which supports the strong negative sentiment on expectations. Meanwhile, respondents said the top negative factor affecting business operating conditions over the next year will be operational costs. In the comments, several respondents reported that small-business owners are struggling with increasingly thin revenue margins and difficulties finding and retaining reliable employees. Economic uncertainty is also a drag on small-business operations; several respondents reported slowing sales and growing concerns around customers’ ability to absorb price increases.

“The cost of materials and supplies is increasing, the cost of living is increasing, but wages are staying stagnant. This makes it difficult for LMI businesses to attract and retain employees and keep their prices affordable for the communities they serve.”

Over half of respondents said small-business credit conditions are poor or very poor (Figure 9). Sixty-six percent expect those conditions to worsen into 2026 (Figure 10). The top positive factors were services that small-business support organizations typically provide, while the negative factors were cost of credit and lack of startup capital (Table 5). Respondents noted that many traditional lenders are increasing lending standards because of high economic uncertainty. Many respondents also mentioned a growing number of businesses closing due to poor business practices rather than lack of revenue.

“Many banks have increased their lending standards, making LMI communities rely on CDFIs [community development financial institutions]. But CDFIs have had to increase interest rates, and some have seen corporate donations decrease given economic uncertainty.”

Health

Over 70% of respondents rated public health conditions as poor or very poor (Figure 11), and most respondents do not expect that to improve (Figure 12). The plurality of respondents expects conditions to worsen substantially. Respondents had mixed comments about insurance coverage saying that while health care access has increased through insurance, many are still without quality health care, which is likely why they rated it as the most positive and most negative factor (Table 6).

“With the number of doctors retiring in the next 5-10 years, [and] the number of nurses expected to leave nursing in the next 5 years—the access issues will only get worse, especially in rural areas. On top of that, you add in an aging population, who often has more health care needs than the younger population, and you are looking at a medical coverage gap that is about to compound every other access issue we already face.”

Several respondents noted that there has been an increase in preventable disease in LMI populations due to poor housing conditions, lack of education about preventive care, lack of nutritious food, and substance abuse. Additionally, several respondents noted that other expenses, such as rent and groceries, are being prioritized over health care costs. They mentioned that preventive care checkups and screenings are being neglected since many people cannot afford to lose hours at work, allowing conditions to go untreated.

“Emergency departments are seeing increased visits for preventable complications, mental health crises and advanced-stage diagnoses.”

A smaller share of respondents reported health care access as poor (42%), and over 30% said health care access was good or very good (Figure 11). Access to telehealth options was rated as the top positive factor, while insurance coverage and cost were the top negative factors (Table 6).

Respondents were primarily concerned that potential funding changes to public health insurance could affect LMI populations’ ability to afford future health care. Additionally, comments reported an increasing difficulty in finding health care providers, especially in rural areas where, they also said, demand for health care is increasing because of aging populations.

Education

Forty-six percent of respondents reported conditions in pre-K through 12th-grade education as poor or very poor (Figure 13). A similar share expects conditions for those grades to worsen (Figure 14). Respondents ranked availability of early childhood education as the top positive factor (Table 7), but many of the comments were about concerns about funding for early childhood education into next year.

Related to their negative factor rankings, several respondents expressed concerns about funding uncertainty and the ability to find and retain teachers (Table 7). In particular, they noted fewer people were becoming teachers, and many teachers were leaving over salary and job security concerns. Some respondents also mentioned that they were concerned about students’ home lives affecting their ability to perform at school.

Respondents were more evenly split on adult education conditions, with 45% reporting poor or very poor conditions and 32% reporting good or very good conditions (Figure 13). They were also more evenly split on expectations (Figure 14). While respondents saw enrollment and employer partnerships as being positive factors on their expectations into next year, they rated support for program completion and costs as drags on expectations (Table 7).

Some respondents commented that it is becoming easier for people to access job training programs because of increased availability of online courses; however, there were also concerns for those who did not have access to the internet. Additionally, respondents noted that many vocational training opportunities require in-person learning and so were not accessible since many LMI people are unable to afford child care or could not take time off work to attend.

“They are focused on making ends meet with multiple jobs; they don’t have time for additional training to increase their wages.”

Human services and emergency assistance

Over half of respondents reported conditions in human services and emergency assistance as poor or very poor (Figure 15). Nearly 80% expect conditions to worsen over the coming year, with half of those expecting conditions to worsen substantially.

“More lower- to middle-class people are seeking food assistance for the first time. More people are seeking food assistance across our network of feeding sites.”

Echoing the poor conditions reported in the sector, the plurality of respondents said there were “no positive factors” affecting conditions for the next year (Table 8). However, there was some positivity in seeing coordination among entities. Their negative factors leaned heavily on economic factors and funding. Nearly 40% of comments stated concern about program funding cuts, and 30% commented on rising demand for services. Unlike last year, many comments also mentioned economic uncertainty and increasing fear about economic conditions.

“In the communities we serve, the demand for human services and emergency assistance among low- and moderate-income (LMI) individuals has reached a critical level. Basic needs like food, shelter, clothing, utility relief, and transportation are overwhelming the capacity of providers like ours. What used to be short-term crises are becoming long-term, recurring needs. For example, our food pantry, which once served primarily emergency cases, now supports hundreds of families on a regular basis who rely on it to supplement monthly groceries. Many of these households include working adults who simply cannot keep up with rising food prices and stagnant wages. We’ve seen seniors skipping meals to afford medications and parents feeding children first while going hungry themselves.”

Digital Skills, and Internet, and Technology Access

Over half of respondents rated internet access as poor or very poor (Figure 16), and the plurality does not expect changes in internet access over the next year (Figure 17). While service availability was a top positive factor, their positive ranking of availability of subsidized internet access was caveated due to lack of awareness of the programs and insufficient funding (Table 9). Comments suggested that internet service access was improved through an increased reliance on cellphones for the internet. However, respondents were also concerned about the growing use of cellphones for internet access because of data limitations and restrictions on using cellphones for job or benefit applications. There were also several comments noting an ongoing challenge with poor internet access in rural areas.

“[The] cellphones this population [uses] have limited data to utilize apps; individuals of this demographic … cannot afford tablets or computers; cost to learn skills is prohibitive; libraries do a very good job of helping, but they are limited in number of computers available, and some individuals are unable to access during open hours.”

Respondents were slightly more concerned about access to technology, with 59% saying that conditions are poor or very poor (Figure 16), and they expected increased reliance on cellphones to be a negative influence on access to technology over the next year (Table 9). Comments reported seeing significant limitations in digital skill development in those who used only cellphones. However, they noted there has been an increase in job training programs including courses on computer skills.

“Community members primarily use cellphones for accessing digital services, which leads to limited digital literacy and skills. Most do not own computers and have limited time to access computers outside the home. Additionally, many in the community possess limited digital literacy when it comes to issues of online safety (e.g., avoiding fraud and misinformation).”

Respondent profiles

About the survey

The Federal Reserve System performs five key functions that serve all Americans and promote the health and stability of the U.S. economy and financial system. Understanding the obstacles that may hinder lower-income and under-resourced communities’ greater participation in the economy offers the Federal Reserve valuable insight into the challenges they, and the entities that serve them, face. To that end, from 2020 to 2023, the Federal Reserve System conducted surveys, called “Perspectives from Main Street,” to better identify the range of challenges facing LMI communities as an effect of the COVID19 pandemic. In 2024, the survey was renamed “Community Perspectives,” and it continues as a national survey aimed at reporting the economic conditions of LMI communities and the health of entities serving them. This survey has two objectives: 

1. Monitor the economic conditions of LMI communities
2. Understand the needs and capacity of organizations serving LMI communities 

The most recent survey was open from April 14, 2025, to May 23, 2025. Responses were collected through a convenience sampling method that relied on contact databases to identify representatives of nonprofit organizations, financial institutions, government agencies and other community organizations. These representatives were invited to participate in the survey via emails, newsletters and social media posts. The survey had a total of 440 responses from entities that serve LMI communities. However, the total number of responses across sectors could differ since not all entities serve in all areas. Respondents were asked to select a topic area based on their entities’ top programming areas and to answer questions related to that sector specifically and not others.