You’re not alone in the cost of living crisis. A new report shows that three-quarters of Americans agree with you and say they’re not financially stable right now. Prices for necessities like housing, food and transportation have skyrocketed over the past three and a half years, and a family needs an annual income of $186,000 to live comfortably.
That’s a staggering figure: more than double what the average full-time worker makes. Even a two-parent household making the average full-time salary would be short about $28,000 a year.
It’s no wonder people are pessimistic about the economy and that 70% of Americans are stressed about their finances. With inflation far outpacing wage growth over the past three and a half years, middle-class people simply can’t afford to live the way they could just four years ago.
Inflation and other economic problems are caused by excessive government spending. The right has nothing to brag about in this regard, but once the radical left took control of Congress and the White House in 2021, spending really ramped up. The federal government has piled on trillions of dollars of spending and borrowing that it doesn’t have.
The amount was so large that the Treasury couldn’t even borrow to cover it all. In response, the Federal Reserve literally created money for the Treasury to spend, inflating the federal debt by nearly $35 trillion. This devalued the currency, making it take more dollars than before to buy the same products and services.
Sadly, it didn’t have to be this way: If the big-spending extremists in Washington, DC, had allowed emergency COVID spending to end at the end of 2020, the federal budget would have been nearly balanced today. Instead, they institutionalized trillion-dollar deficits and predictably led to the highest inflation in 40 years.
Over the past few years, rising prices have completely destroyed the budget of a typical American family. Even though that family’s weekly wage increased by about $300, that additional paycheck drastically reduced their purchasing power, so they could buy about $100 less.
As a result, millions of Americans have had to take on second jobs (or even third jobs) to survive paycheck to paycheck. The skyrocketing cost of living has pushed millions of Americans into credit card debt, with total outstanding balances now exceeding $1.1 trillion.
The Fed responded belatedly to the inflation it created by raising interest rates, dramatically increasing the cost of borrowing, including credit cards. American families now pay more than $260 billion a year in credit card interest alone.
For the typical American family, today’s inflation and rising financing costs equate to about $8,000 less in annual income compared to three and a half years ago.
The deadly combination of high prices and high interest rates is perhaps most evident in the housing market: Monthly mortgage payments for the median priced home in June of this year were about 120% higher than they were in January 2021, when the far-left took control of the federal government.
That means the cost of homeownership has more than doubled in just three and a half years. Buying the average home in the US today would cost an extra $14,000 per year for 30 years.
The skyrocketing cost of housing comes alongside soaring prices for food, insurance, transportation and clothing — the necessities of life, not yachts and caviar, that are straining the wallets of middle-class Americans.
To make matters worse, the federal government has embarked on a regulatory rampage over the past three and a half years that is costing American households thousands of dollars in additional costs each year.
But the plight of the American middle class is of no concern to the far-left, who are determined to advance big government, anti-growth, anti-family policies at all costs — policies whose costs, we warn you, are growing faster than the federal debt that finances them.
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EJ Antoni is a public finance economist, Richard F. Astor Fellow at the Heritage Foundation, and a Senior Research Fellow at Unleash Prosperity.
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