The typical American household must spend an additional $11,434 annually just to maintain the same standard of living they enjoyed in January of 2021, right before inflation soared to 40-year highs, according to a recent analysis of government data.
That seems absurdly high and does not match my personal experience at all.
The analysis, from Republican members of the U.S. Senate Joint Economic Committee
Oh. So people like JD Vance, Tom Cotton and Mike Lee are responsible for this
lie, damn lie, andstatistical analysis.I can only assume they included many people the rest of us would consider rather rich in their “typical American household”; If I’m paying an extra few percent in inflation it’s not nearly that much, but for someone making mid-six figures with a lifestyle matching that income a couple of percent can add up to a lot of money.
I mean that’s 950 a month. My husband and I weren’t rich, but we used to order in weekly, we didn’t have to compare prices when grocery shopping, and we used to go on a trip (not out of the country but possibly out of the state) once or twice a year. We used to have streaming services (almost all of them). We used to buy our friends’ birthday gifts and each other Christmas presents. We used to have two cars. We used to buy candles and name brand cleaners. Now we do none of that, plus our rent went way up. We are scraping by. We have no streaming services, one car, eat a lot of rice, and are not exchanging Christmas gifts. We don’t go to events of any kind, and we don’t consider vacations. I’m not surprised that it easily adds up to 950 a month, especially when you consider the two rent increases between Jan of 2021 and now (the latest was a 30% increase)
Yeah, 2021, when Biden took office. Sketchy report for sure.
Always check your sources!
They’re saying household, so I bet you can divide by four and get less than a thousand a year over a three year period. My solitary life has most certainly not gotten eleven thousand dollars more expensive for “basics”.
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Andrew Yang was right when he was calling out the GDP as being a crap metric to monitor the health of our economy. The GDP is meaningless to the average person.
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The analysis, from Republican members of the U.S. Senate Joint Economic Committee
Just FYI
The Republicans know that the world is unlivable, they like it that way, they just can’t be happy unless they see someone suffering
When pay significantly lags the cost of basics you’re gonna have a bad time.
And inflation was more than 3% last month? Still adding insult to injury.
Just a note - that 3% is anualized. That means at the current rate, 12 months adds up to 3%. Still, point is valid.
Inflation was 3.2% from October 2022-October 2023. When it’s reported like that it’s an annualized rate. So it would be more accurate to say inflation was 3.2% over the last year. Inflation from September 2023-October 2023 was unchanged (0%).
Wage growth has also been ahead of inflation since January 2023. Inflation was outpacing wage growth from May 2021-Dec 2022
https://www.statista.com/statistics/1351276/wage-growth-vs-inflation-us/
It makes my 6 percent raise drop to basically 2.8 percent. However, I’m thankful for getting a raise in the first place.
Unemployment is at historic lows and labor remains in high demand. This is the time to be bargaining with your employer for raises or entertaining competing job offers if you can. Also unions, more unions please.
I work in tech and we have had thousands of layoffs all year long. It’s not as easy to find a better paying job. I have been trying since March.
I’m actually more than happy with my pay, but I hate the work, and the team I am on isn’t exactly organized, so everything is a hot mess.
I wish tech would unionize. That would be amazing.
Totally understandable. All this data are averages across the entire economy, and people in different industries or situations or locations aren’t all going to be experiencing the same thing.
You’re also right about the tech industry, the tech industry is newer and lags other industries in unionizing efforts.
If you’re interested in unions, the best place to start is by contacting existing unions for assistance. It’s not always in the name, for instance united steel workers has been active in unionizing efforts in tech.
A campaign by the united communications workers of America has also been active and formed 25 bargaining units in the tech industry so far. https://en.m.wikipedia.org/wiki/CODE-CWA
It’s also going to depend on what state you’re in. If you look at a percentage of union workers by state, it’s almost a direct red state blue state correlation, with so called “right to work” laws in red states heavily discouraging union formation.
Even if people aren’t in a union, they benefit from unions in their industries as other employers have to compete with union benefits and pay. Sorry for the ramble, I just really like unions.
Working in tech amidst a hot mess seems to be the default position.
Haha, basically.
Eat the rich!
Promises Promises
Eat the Fed!
I mean if you’re gonna criticize the whole capitalist system sure. Within the confines of the current system and the inflation problem though they did a pretty good job. Not like there’s a good model of “how to deal with rapid inflation as economies reboot after a global pandemic” to follow. In hindsight maybe they should have started to raise interest rates sooner. But we were just starting a huge recovery and still trying to get everyone employed again. Even after inflation was starting the fear was raising interest rates would have to plunge the whole economy into recession and cause mass unemployment before inflation would get under control. It’s kind of remarkable that this was avoided.
Just look what happened in the 1970s and 1980s, when 30 year mortgages got up to 18%, real wages (your wages considering inflation) plummeted for a decade and didn’t really start recovering until the 2000s. In our current situation the real wages compensated for inflation have recovered as of this fall already when compared to 2019. And we did it all better than the majority of other countries worldwide who were experiencing the same problems as their economies rebooted. Anyways, point is, probably as good of a job on the feds part with this current situation as anyone could have done.
Do eat the rich though, by all means.
I mean if you’re gonna criticize the whole capitalist system sure.
- The Federal Reserve purchases assets and thereby increasing bank reserves.
- The banks expand credit and consequently the money supply.
- All prices are raised, and the rate of interest is artificially lowered.
- Misleading signals to businessmen starts to emerge, causing them to make malinvestments.
- Businesses overinvest in capital goods and underinvest in consumer goods.
- As the “time preference” of the public have not really got lower, consuming is preferred over saving.
- There is a lack of enough saving-and-investment to buy all the new capital goods.
- Then, “depression” originates in order to reestablish the consumer’s old time-preference proportions.
- The banks return to their natural and desired course of credit expansion…
FIAT money is independent of capitalism. Its coercive existence leads to distortions of relative prices and the production system, as government and its central bank will always tend to be inflationary.
Exactly. I just meant for the context of the posted article about inflation and our existing economic system, fed did a decent job at bringing it down without crashing the economy, unlike the last time they gave this a go. I included the disclaimer at the start of the comment because I didn’t want to imply I was in support of grow at all costs eat the entire earth capitalism though. Not sure how long that paradigm is gonna be able to continue. It all comes back to eat the rich in the end.
But I’m sure the fact that we haven’t raised the minimum wage a single time since 2009 has absolutely nothing to do with this
I need $11,400 a day to afford the basics.
I make less than that per year. :/
You may need a new job…
Pretty sure that is illegal in the USA if you are working full time.
I gave the methodology a read, and it’s a real head scratcher. I haven’t sat down and done the math myself, but if I were going to, I would first investigate all the assumptions they had to make, such as:
- using the Personal Consuption Expenditures PCE measure of spending instead of the Consumer Expenditure Survey (CE) , since one includes military and government spending on behalf of households and the other doesn’t
- Using 2019/2020 aggregate spending estimates at the census division level as part of a formula to estimate Jan 2021 spending data. (2020 was not a normal year for spending)
- Using a Gross CE/PCE ratio at the census division level to estimate consumer spending in each census division’s constituent states
- using the PCE growth nationally (remember what it includes) as a substitute for statewide , statewise expenditure growths.
- Again, using census division aggregate data to estimate state level consumer units per household
- providing no validation that their methodology for transforming PCE values into CE values works (it should have been as simple as calculating it for other years, say 2015,2016, and checking the accuracy)
- using Census division CPI instead of state data.
Anyway, this is where I would start picking this mess apart. If I were so inclined.
From this little bit, I’d be concerned about the analysis using suppressed spending in 2020 as the starting point in 2021, as well as including spending from outside the CPI basket and non household entities in CPI estimates. I’d be concerned about over generalizing the states by estimating using their census units. Basically, I’d consider this report skeptically at best if no additional validation can be provided.
It’s not really that far off the mark when you just look at your own budget at home, though. Shit on average costs about 10-20% more (and for some products, even higher than that) than it did 5 years ago. Hell, 85/15 ground beef was ~$5/lb back in 2019/2020 where I live, now it’s $7.50/lb, that’s 50% increase right there. Same with milk and eggs.
Bottom line: I think you way over analyzed something that can easily be solved by just looking at your grocery and monthly bills now vs a few years ago.
Their estimate of $11k is too high for me. But I can easily see this being the case in some areas. For me, our cost of living has definitely increased by about $500/month, so $6000/yr. But, I also live somewhere with a relatively low cost of living.
People will use bad analysis to play on your gut feelings because they want you to act a certain way. In this case, republican senators created a flawed analysis specifically to make people who feel like you do wrongly associate rising costs with democratic policy and policy makers. Whose best interest is it in to uncritically accept their analysis? Who gains from their overestimate?
Huh? Where did I say anything about politics?
I was simply saying it’s far easier to figure out how much inflation has effected you by looking at your monthly bills’ trend over the last few years. You have to be on another planet if you don’t think inflation has been awful. Some of that has been due to Democrats’ policies, some of it Republicans’, and the rest of it simple corporate greed. But none of that commentary was on my original comment.
Edit: I should add that the economy is far too complex and massive for one person to immediately impact it to that degree (barring some insane, drastic action). People who think the president has a magic economy and gas price button are idiots. Congress ultimately controls a large amount of economic impact (e.g. enacting the Build Back Better bill that Biden was the PR spokesperson for).
on god
really? sure, things are more expensive, sure but I havent been spending an extra $11.5k. if I did that i’d have probably zero savings. dunno where they get these numbers from
Idk my wife and I are very secure financially so we don’t worry about most things but I am still in awe of the increase in grocery prices. We’re in the states, and for our basic non perishable items I order from Walmart. For meat and produce I typically buy from local grocery stores due to quality. Sometimes I’ll forget or have to buy things from the grocery store that I’d normally buy at Walmart, and those things are AT LEAST 50% more. In some cases I have seen 100% increase in prices, and an overall increase of at least 25 % from the previous year, which is insane. I have no idea how families on a strict budget are managing groceries, let alone other living expenses. $11.5k does seem slightly exaggerated, but not by much.
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I wouldn’t say it went up that much but I’m definitely seeing it in my grocery runs. Haven’t changed habits that much but it’s easily $15-17 more per trip than it used to be.
No way. That’s nearly $1000 per month. There’s no way. 3 or 4 hundred per month sure.
If you have a spouse and kids that 3 or 4 is multiplied by 3 or 4.
If?
