The image above sits atop the Bloomberg report “Just How Bad Is the US Cost-of-Living Squeeze? We Did the Math.” By being specific rather than using the traditional generic indicators, it’s helpful in explaining why Americans feel overwhelmed despite an overall state of economic health.
After years of inflation, US consumers are shouldering a burden unlike anything seen in decades — even as the pace of price increases has slowed.
It now requires $119.27 to buy the same goods and services a family could afford with $100 before the pandemic. Since early 2020, prices have risen about as much as they had in the full 10 years preceding the health emergency.
It’s hard to find an area of a household budget that’s been spared: Groceries are up 25% since January 2020. Same with electricity. Used-car prices have climbed 35%, auto insurance 33% and rents roughly 20%.
Those figures help explain why Americans continue to register strong dissatisfaction with the economy: Consumers’ daily routines have largely returned to their pre-pandemic normal, but the cost of living has not.
And the government data reports that show easing inflation are cold comfort, because they simply indicate prices are growing at a slower pace, not that they are returning to early 2020 levels.
At the same time, housing affordability is at its worst on record, auto-loan rates have soared, and borrowing with a credit card has never been so expensive.
Many Americans have seen their pay rise rapidly since 2020, but much of those gains have been gobbled up by inflation. Some of the fastest wage increases in decades have left the average American largely no better off than before.
Not only have prices overall have gone up by almost a fifth in under four years—faster than they had in the entire previous decade—but they’ve gone up even more on goods and services that people pay most attention to. For those who aren’t affluent, rent and used cars going up that much are not only crushing but almost guarantee not being able to rise above one’s current circumstance. One can’t save up for a down payment on a house if rents keep going up. And, of course, the radical increase in interest rates leave people trapped in their current homes.
Alas, the authors then shift in a way that drives me nuts:
Consumers’ frustration with prices and elevated borrowing costs could help decide whether President Joe Biden wins a second term: Four in 10 swing-state voters in a recent Bloomberg News/Morning Consult poll said the economy was their top issue in the 2024 presidential election.
While feelings are what they are, it makes no sense to judge Biden based on how much prices have gone up since the pandemic. He wasn’t President the first year of that.
The rest of the report is a deeper dive into the price categories followed by colorful quotes for Regular Americans that may or may not be representative. But, for example, in the discussion of groceries, we get:
A pound of ground beef now costs $5.23 on average, up from $3.89 in January 2020. Coffee is up some $2 a pound. Prices for fresh fruits and vegetables are nearly 14% higher. At one point, the price of a carton of eggs was triple its pre-pandemic price.
“It’s a huge slap in the face and I’m surprised that some people are saying inflation’s coming down,” said Ryan Essenburg, 50, who lives in California’s Bay Area. “It’s hard. You go get your bill and it’s like, ‘What’s happening here?’”
In October 2020, a Census Bureau survey showed a four-person household spent an average of $238.32 in a week on food at home. Three years later, a similar survey showed that figure had jumped to $315.22 — roughly 32% more.
Grocery inflation is anticipated to return to less than 2% next year, but that might not offer consumers much relief.
“I don’t see any other way than food overall is going to be taking a higher share of people’s disposable income than before,” said Brandon McFadden, a professor in food policy economics at the University of Arkansas. “You can’t wiggle out of buying food.”
And, of course, this hits the working-class voters who are most likely to shift their allegiance from election to election harder than it does college-educated professionals and other higher earners. They’re legitimately squeezed and anxious.
That it’s largely irrational to blame Biden or, indeed, any politician for this is really beside the point. That prices have gone up here less than they have in most other OECD countries is of little comfort to those struggling to pay their bills.
At the same time, aside from expressing sympathy for these price increases, I’m not sure what it is Biden is supposed to do about it. Apparently, good old-fashioned demagoguery is the current plan.
President Joe Biden took aim at corporations Monday for charging prices he said were artificially high even though the rate of inflation has slowed and some shipping costs have fallen.
“Any corporation that has not brought their prices back down, even as inflation has come down, even as the supply chains have been rebuilt, it’s time to stop the price-gouging,” Biden said at the launch of a new White House supply chain initiative. “Give the American consumer a break.”
While it’s true that the annual rate of inflation has cooled from its high last summer, this doesn’t translate directly into falling consumer prices. It only means that prices are rising at a lower rate.
Prices for some everyday goods have fallen over the past year, a reality reflected in lower Thanksgiving costs this year, for example. And lower costs have in turn left some consumers with more money in their budgets for things like Black Friday shopping, which rose 7.5% this past weekend over a year ago.
As Biden runs for reelection, the White House has sought to claim these broad spending and pricing trends as victories for the president and his economic agenda, dubbed Bidenomics.
But the argument that Biden deserves the credit for a strong economic recovery has proven to be a tough sell to voters, who consistently give the president low marks on the economy.
“We understand that people are still not feeling it, we get that,” White House Press Secretary Karine Jean-Pierre said Monday, ahead of the president’s supply chain event.
This is a more useful approach:
Faced with a skeptical audience, targeting so called junk fees, which Biden said “companies sneak into your bill,” offers the White House with a chance to directly show voters what Biden is doing on their behalf.
It also provides the president with an easy target in the inflation blame game.
“Junk fees take real money out of the pockets of average Americans,” Biden said Monday. “They can add up to hundreds of dollars, weighing down family budgets and making it harder for families to pay their bills.”
Eliminating hidden charges on everything from airline tickets to cell phone bills is hardly going to make up for higher rents and grocery bills. But the practice seems inherently unfair and may well be within the President’s authority to address.
