PROVIDENCE -- Plates of brightly decorated Christmas cookies lined the tables, bags and boxes with gifts covered the floor, and excited giggles from small children gathering around Santa lingered in the air.

But beneath the cheery facade of this holiday party at a homeless shelter here, was a grim reality.

Eighteen families are celebrating the holiday in this shelter designed for 15. After this Dec. 12 party was over, one family pushed aside the dining room tables to sleep on the floor. The 18-year-old mother of a month-old infant bedded down on an air mattress in a small, cluttered playroom. Another squeezed onto the floor of a computer room.

The number of homeless families seeking a place to sleep in Rhode Island's six shelters this winter has "broken every record," says Anne Nolan, president of Crossroads Rhode Island homeless service organization, which runs this shelter.

"It's trickle-down economics at its worst," she says. "It takes people awhile to be pushed out of the bottom."

This holiday season, many families, especially low-income ones, are fighting to become a positive statistic in the nation's slow economic recovery. But many lower-income families are just now starting to deal with the full effects of the recession. USA TODAY checked in with families at different income levels to see how they were were approaching -- or coping with -- the holidays in the still-precarious economic climate.

While middle- and upper-income households are benefiting from rising home prices, refinancing and have been able to get ahead of their debt, lower-income and younger households continue to be crippled by student loans, have less access to credit and often have relatives coming to them for support, says Diane Swonk, chief economist at Mesirow Financial in Chicago.

Savings are dwindling, and even those who lost jobs and found work again are still struggling to catch up.

Some of these families turn to charities and shelters such as Crossroads for a warm place to sleep on winter nights or a chance to give their kids some semblance of a normal Christmas. A few blocks away from Crossroads' headquarters, the non-profit agency Children's Friend was in the midst of a holiday drive that collected gifts for about 1,100 families, including some of the state's poorest and most vulnerable children.

Starlie Becote's five children were among them.

"I don't even have a dollar to buy them anything," says Becote, 30. "I've always had something for them."

As a case manager for a community mental health center, Becote earns $13.57 an hour and drives up to 800 miles a month visiting people with mental health or drug problems and helping them with errands. Once a month, she's reimbursed 51 cents a mile, which she says barely covers gas costs for her fuel-thirsty minivan. With her five children in tow, Becote ran out of gas on the way to the interview for this story and had to call one of the children's fathers to borrow money.

Starting when Becote was 12, she moved by herself through state emergency shelters. At 16, she married a man she had known for a month, but left him to live on the streets after he assaulted her so brutally, her head was nearly split open. But it's now, even with an apartment and job, that the single mother feels as if she's ready to crack under the weight of responsibility for five kids under age 12 and $35,000 in student loan debt.

"I feel like I've been through so many things," says Becote. "Why, at this point, am I breaking?"

Jobless numbers

Unemployment hit a four-year low with the latest jobs report, dropping to 7.7%. But that's due in part to 350,000 Americans who left the labor force -- they either retired or stopped looking for work altogether.

"That's nothing to write home about," Swonk says. "Unemployment hasn't fallen for the right reasons, and now, we're struggling with the people we've been supporting."

Many unemployed are also facing the end of their unemployment insurance, which is "further stressing these lower-income families," she says. They've either already exhausted the number of weeks they're eligible to receive benefits for or will be affected by a federal extension to states' unemployment insurance that expires at the end of the month unless it's renewed as part of the fiscal cliff negotiations.

Across the country, financial hardships are hindering holiday plans.

Velma Wilson, 40, wanted to replace her kids' Wii system and games for Christmas after they were stolen when their house was broken into over the summer. But she had to cancel the Kmart layaway order the items were included in when she realized she couldn't afford the $600 bill.

Wilson and her husband, Clarke, of Antioch, Calif., have had a difficult time staying on top of bills since both lost their jobs in 2009. Velma found a job on the sales floor of an auto dealership in March 2011. But a knee injury on the job two months later has left her unable to work, fighting in court for workers compensation benefits, and facing her second surgery in a year next month.

"It's been extremely hard," Velma says. "My kids have gone through a lot because they've had to experience Mommy and Daddy both losing their jobs. They've had to deal with holiday seasons where the economy is so bad, what we would try to do for Christmas we couldn't do because we didn't have the means. We were just trying to live."

Clarke Wilson now works as a dispatcher for a transportation company, making about $200 more a month than Velma does in workers compensation. She gets a little less than $2,000 a month, but she made about $4,500 a month when she was working at the auto dealership full time. With her benefits and her husband's income, the family is on the lower end of what is considered middle class -- median family income in the past 12 months is about $61,000, according to the Census Bureau.

The couple are a month behind on their rent and have to make trade-offs to cover utility bills.

Holiday retail sales suggest that even higher-income families are cutting back or shifting their holiday spending to other categories. Retail sales are up, but not as much as last year, and department stores and discount stores have taken a hit, while home improvement stores have seen gains because of homeowners feeling more comfortable investing in remodels or new home goods, Swonk says.

Then there's the looming fiscal cliff, which the non-partisan Tax Policy Center estimates would raise taxes by an average of about $3,500 per household if Bush-era tax cuts aren't extended by Dec. 31.

Particularly for lower-income adults, though, fears about the fiscal cliff have affected spending decisions this holiday season. A recent survey by Bankrate.com of about 1,000 adults shows that one in three cut back on personal spending in the last 30 days due to fiscal cliff concerns. Those most likely to have said they were cutting back were households with less than $30,000 in annual income.

Children's Friend CEO David Caprio says his group is "seeing families we never would have served before." He says people are harder hit now because of high unemployment, reductions in government funding for social programs due to state and local deficits and cuts in the amount struggling businesses are able to give to charities. Nearly all the families that use the services of Children's Friend don't have anyone working, even part-time. Child-care subsidies, which have been reduced, "are what allows many people to enter the workforce," he says.

Some of the requests Children's Friend receives for gifts and reactions when they get them underscore Caprio's point. One little girl asked only for a towel of her own so she didn't have to share with her brothers. It's so rare for them to have new clothes, children sometimes keep the tags on clothing gifts to show others they weren't secondhand, says Stacy Couto, a Children's Friend vice president.

Just the basics

Alicia Bryant, 34, knows how that feels. She says it's hard sometimes to find the money to buy soap and the higher-quality diapers her son needs because of a skin condition She's supporting a multi-generation family of five with food stamps and the $7.85 an hour she earns as a seasonal retail cashier at Kohl's. Crossroads rented an apartment for Bryant, her 3-year-old son, two teenage nieces and her father because there was no room in its shelters.

Although it took more than 100 applications to find a job, she's glad to have even one that may end after the holidays. She should be: Unemployment in Rhode Island was well above the national average, at 10.4% in November and the second-worst in the U.S. after Nevada. This month, Forbes' annual ranking of the best states for business ranked Rhode Island second to last, ahead of only Maine.

After Alvin Harris, her father, lost his job, her mother died in the spring of 2011. The family could no longer afford their house without her salary and sold it in a short sale. They lived in a hotel for six months until they contacted Crossroads when they were down to about $40.

The only decoration evident in the apartment is a photo of President Obama on the wall. Although the family has been there since July, they have to prove each month that they're saving money and making efforts to find work and their own housing. Alicia is hoping to renew her lapsed license to be a certified nurse's assistant, which would pay more than her current job, and go back to college. She says she is thankful her cupboards have food when she knows some of her nieces' friends are hungry.

The apartment had only inflatable mattresses when the family arrived, but the storage company let them get their beds and some of their belongings out with what little money they could scrounge up. Through tears, she explained how thankful she is for what she does have. At Kohl's, she sees people who are often worried about what little they can give members of their family. She says they are focusing on the wrong things: "You need to show your family love and tell them how great it is to be with them."

Motioning around the apartment, Bryant notes, "It may not seem like a lot to someone else, but to us, it seems like a million dollars."

USA Today