A recent study conducted by the University of Houston’s Hobby School of Public Affairs highlights growing financial instability among residents in the Greater Houston area, driven by inflation, mounting debt, and insufficient savings. The findings come amid U.S. Census Bureau data showing Houston holds the highest poverty rate among major American cities at 21.2%. n nThe Center for Public Policy’s quarterly SPACE City Panel survey provides a granular look at household-level economic conditions, offering insights beyond broad national statistics. According to Pablo Pinto, director of the Center and a professor at the Hobby School, understanding financial stress at the individual household level is crucial, as public datasets often fail to capture personal economic realities. n nNearly 86% of respondents cited the high cost of living as a primary financial concern. As a result, 46% reported reducing spending on essentials such as food and utilities, while over half cut back on non-essential expenses like travel, entertainment, and vehicle purchases. This widespread cost-cutting has contributed to a generally negative perception of the local economy, with most residents rating economic conditions as “fair,” “poor,” or “very poor.” n nDebt is prevalent across income brackets, with more than 70% of households carrying some form of financial obligation. Credit cards, auto loans, and student loans are the most common types. Lower-income households—those earning under $60,000 annually—are more likely to rely on credit cards for basic expenses, leading to accumulating balances and higher interest payments. In contrast, higher-income individuals tend to use credit more strategically and pay off balances monthly, avoiding interest charges. n nMaria P. Perez Arguelles, lead researcher and research assistant professor at the Hobby School, emphasized that this disparity affects long-term financial outlooks. She noted that households with savings demonstrate greater confidence about their future, while those without face heightened vulnerability during economic downturns. n nAdditional findings reveal racial and ethnic disparities in debt composition and savings. Black respondents reported student loans as their largest debt burden, while white, non-Hispanic households carried higher car loan and credit card balances. Asian respondents faced significant levels of both credit card and student loan debt, and Hispanic households reported high credit card and auto loan obligations. Savings gaps are also pronounced: white and Asian families are nearly twice as likely as Black and Hispanic families to have investment portfolios or emergency funds. n nLooking ahead, fewer than one-third of respondents expect their income to match inflation over the next year. Among those who believe it won’t, 76% are considering relocating from Houston. These trends raise concerns about sustained economic mobility and resilience within the region. n— news from University of Houston
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University of Houston Report Highlights Economic Strain, Debt Burdens Among Area Households
A new report from the Hobby School of Public Affairs shows many Houston-area households are experiencing growing financial insecurity, widespread debt and limited savings. (Credit Getty Images) n nMany Houston-area households are experiencing growing financial insecurity driven largely by inflation and widespread debt, according to a new report from the University of Houston’s Hobby School of Public Affairs. n nThe findings — released as part of the Center for Public Policy’s Survey on Public Attitudes and Community Engagement City Panel, or SPACE City Panel — follow recent U.S. Census Bureau data showing the city of Houston has the highest poverty rate among major U.S. cities at 21.2%. n nWhile census data paints a broad picture of financial strain, CPP researchers can fill the gap with quarterly, in-depth household-level surveys. n n“We want to understand what’s happening at the household level, which is something publicly available data doesn’t necessarily reflect,” said Pablo Pinto, director of the CPP and professor in the Hobby School. n nWith nearly 86% of respondents identifying the high cost of living as a top economic challenge, 46% of households reported cutting back spending on essential needs, like food and energy, and more than half of households cut back on discretionary items such as vacation, recreation and vehicles. n n“We want to understand what’s happening at the household level, which is something publicly available data doesn’t necessarily reflect.” n n— Pablo Pinto, UH’s Center for Public Policy n nThis belt-tightening has contributed to pessimistic views of the local economy, with most residents in the Greater Houston area rating economic conditions as “fair,” “poor” or “very poor.” n nDebt is also widespread, as more than 70% of households have some form of debt — the largest, most common being credit cards, car loans and student loans. Type of debt varies by income level, with credit cards accounting for the bulk of debt for households making less than $60,000 annually. n n“Lower-income households usually use credit cards more for emergency things like buying food or covering monthly expenses, so their debt builds up, and they have more interest to pay,” said Maria P. Perez Arguelles, lead researcher on the report and research assistant professor at the Hobby School. “This is opposed to higher incomes where you see that they usually have more capacity in their credit cards, but they pay it month by month, so they don’t have to pay for the interest.” n nThis leads to respondents having a cautious economic outlook. Fewer than one-third expect their income to keep pace with inflation over the next year. Among those certain it won’t, 76% said they’re considering or open to relocating from Houston. n nOther key findings include: n n30% of city of Houston residents rated their community’s economic conditions as “poor” or “very poor” compared to only 17.6% in surrounding areas. n nDebt patterns vary by race and ethnicity, as Black respondents reported student loans as their largest debt; white, non-Hispanic respondents reported higher balances in car loans and credit cards; Asian respondents reported high levels of both credit card and student loan debt; and Hispanic respondents reported high levels of credit card and car loan debt. n nSavings gaps are also stark: white and Asian households are nearly twice as likely as Black and Hispanic households to report having savings or investment portfolios. n nThese disparities raise concerns about long-term financial security and the ability to weather economic downturns, Perez Arguelles said. n n“Those that have savings have a more positive outlook on their financial future,” she said. “Having that savings capacity definitely gives households some confidence about the future.”