A new report from the University of Houston’s Hobby School of Public Affairs shows many Houston-area households are facing mounting financial pressure due to inflation and widespread debt.

The study, part of the Center for Public Policy’s Survey on Public Attitudes and Community Engagement (SPACE City Panel), comes as recent U.S. Census Bureau data revealed that Houston has the highest poverty rate among major U.S. cities, at 21.2%. While census figures provide a broad view, the SPACE City Panel offers household-level detail through quarterly surveys.

According to the report, 86% of respondents cited the high cost of living as their greatest challenge. Nearly half said they had reduced spending on essentials such as food and utilities, while more than half cut back on discretionary purchases like vacations, entertainment, and vehicles. These adjustments have shaped a bleak economic outlook, with most households rating local conditions as fair to very poor.

Debt emerged as another widespread strain, with more than 70% of households carrying some form of debt. Credit cards, auto loans, and student loans were the most common sources. Debt patterns varied by income, with credit card balances representing the largest burden for households earning less than $60,000 annually.

The survey also revealed deep disparities across race and ethnicity. Black respondents reported student loans as their largest source of debt, while white, non-Hispanic respondents carried higher balances in credit cards and auto loans. Asian households reported high levels of both credit card and student loan debt, while Hispanic households cited credit cards and car loans as their main liabilities.

Savings gaps added to the financial divide. White and Asian households were nearly twice as likely as Black and Hispanic households to report having savings or investment portfolios. These differences raise concerns about long-term financial stability and the ability of households to weather economic downturns.

Fewer than one-third of respondents expect their income to keep pace with inflation over the next year. Among those who do not expect to keep up, more than three-quarters said they are considering or open to relocating from Houston.

The survey was conducted Aug. 11 through Sept. 4. The full report, along with earlier studies on the job market and climate change, is available on the Hobby School’s website.