Cost-of-Living Continues to Skyrocket in US

President Joe Biden has adopted a sanguine tone on the economy of late, boasting about “Bidenomics” and saying that “I’ve never been more optimistic about America’s future.” Many ordinary Americans, though, are living a rather different, and altogether more dismal, reality.

A recent Associated Press report shows that many Michigan residents are struggling to pay for basic goods, and are often one surprise bill away from financial ruin. “I feel like there’s a recession and I’m living it,” said one. “The cost of living, groceries, cereal, car insurance, and the equipment for my business is more expensive.”

According to EJ Antoni, a Research Fellow at the Heritage Foundation, Americans are in the throes of a massive cost-of-living crisis which no amount of rhetoric can smooth over. The statistics he cites are sobering: 60% of Americans are living paycheck-to-paycheck, credit card debt has topped $1.1 trillion, and real earnings have fallen for the bottom half of workers since the beginning of the Biden presidency.

Much of this, Antoni says, is attributable to the $1.9 trillion American Rescue Plan and the 1.2 trillion infrastructure bill, both passed in 2021. These bills were actually a scaled-back version of the Biden administration’s massive Build Back Better plan, which could not get the votes necessary to pass the Senate.

As a result of all of this spending, our nation is now over $34 trillion in debt. For comparison, the national debt was under $10 trillion in 2008, reached $24.9 trillion in 2016, and still sat at $27.1 trillion in 2019, immediately before the pandemic. The debt is projected to reach $54 trillion within the next decade – or an increase of over $2 trillion each year.

Meanwhile, inflation continues to rise. The Biden administration has boasted of a decrease in inflation in recent months, but this obscures some crucial facts. Admittedly, the inflation rate in the United States was 3.4% for December 2023 – a sharp decline from the June 2022 rate of 9.1%, although still nearly twice the Federal Reserve’s desired inflation rate of 2%. Yet even this reduced rate is far higher than at any point in 2019 or 2020. Besides, past inflation rates are now baked into the cake – meaning that even if inflation hit zero, prices would still be significantly higher than they were four years ago.

The Biden administration has made the fight against climate change a central policy priority, and yet this agenda comes with its own set of tradeoffs. Recently, driven by climate concerns, the government placed a freeze on natural gas export permits – a hitherto booming sector of the economy. While this move may have appeased certain environmentalist elements in the Democratic Party’s base, its economic ripple effects will likely be deleterious for a broader swath of Americans.

A report by the Congressional Budget Office has revealed that the administration’s green energy goals, which include the imposition of new emissions standards on vehicles and clean energy tax credits, will far exceed their original projected cost. Automobiles are becoming more and more expensive for the average consumer, with the cost of a new car now topping $47,000 – an increase of over $10,000 since 2019. The costs of compliance with the new emissions standards will likely make buying a car even more onerous.

Yet there are few areas where Americans are feeling the economic pain more acutely than in the cost of housing. As Antoni points out, “the median price home is affordable with the median income in only one metropolitan area (population of at least 500,000) in the whole country.” For many Americans, home ownership has become a pie-in-the-sky dream rather than a realistic goal.

According to the House Committee on the Budget, much of the housing affordability crisis is also attributable to federal policy, particularly the interest rate hikes implemented by the Federal Reserve in 2022 and 2023. Interest rates on a 30-year fixed mortgage are now more than twice what they were in January 2021 – and the cost of an average mortgage now exceeds 50% of average wages. If voters are expected to sacrifice half their paycheck to own a home, it is small wonder that economic disillusionment is rampant.

All this, perhaps, is why Democratic strategist James Carville has advised his fellow Democrats to not lecture voters about the economy, saying, “If you tell people they live in a good economy, and they don't think they do, they think you don't understand their lives.”

Whether the Biden campaign will take his advice remains to be seen. Of late, the president has shifted his messaging, trying to pass the blame for high prices off of the government and onto corporations “ripping people off” with “(p)rice gouging, junk feeds, greedflation, shrinkflation.” This messaging may or may not have its intended effect, but one thing is clear: American consumers are in a sore spot, and their frustrations will likely find an outlet in their votes this November.