Life in America is more expensive than ever.
“Food, rent, gas, back-to-school clothes, prescription medications. After all that, for many families, there’s not much left at the end of the month.”
That’s not a Republican attack line on the Biden administration’s handling of the cost of living crisis – that’s Democratic nominee Kamala Harris on the stump back in August, promising to turn things around.
These acute strains on the household purse have not been offset by earnings growth. Real-terms weekly wages are down 2.1 per cent.
Ms Harris’s running mate, Tim Walz, recently claimed people “can’t afford four more years of this”, in an apparent gaffe. But the numbers certainly stand up his point.
Inflation
Spiking oil and gas prices in 2021, which were then exacerbated by Russia’s invasion of Ukraine in early 2022, pushed inflation up around the world.
The US was not spared: the consumer price index peaked at 9.1 per cent in July 2022, according to the US Bureau of Labor Statistics (BLS). Its rise was notably earlier and faster than in Western peer nations.
A chorus of experts, pointing to basic economic theory, pinned this on the freshly elected President Biden’s March 2021 $1.9 trillion American Rescue Plan, designed to shake off the effects of the pandemic for good.
The combination of this, and the Federal Reserve’s initial reluctance to raise interest rates, wreaked havoc on personal budgets.
The United States Department of Agriculture estimated a typical family – consisting of two adults and two children with “moderate” spending habits – forked out $314 a week on food, or $1,361 a month, in August.
The month of Mr Biden’s inauguration, the same household would have spent just $1,147 a month. That’s an 18.8 per cent increase over his term so far, working out to an extra $2,500 a year – about the cost of a round-the-world trip from New York’s JFK airport.
Economy
Total expenditure for all family units was $63,036 in 2019, the last year of the Trump presidency unaffected by Covid-19. By 2023 this had swollen 22.6 per cent to $77,280, according to the BLS.
The share going towards groceries expanded only slightly, from 13.3 per cent to 13.6 per cent. This is chiefly because the costs have gone up across the board – only the proportion devoted to entertainment, apparel and other miscellaneous items fell substantially. Energy prices were 37.7 per cent higher in August than they were in January 2021. This affects housing and transportation costs alike. Americans drive 13,476 miles a year on average, according to the Federal Highway Administration – roughly twice as much as Europeans.