It’s rather negligent of the article to ignore inflation on other areas such as basic needs as well such as price gouging for toilet paper, the immediate war with Russia that suddenly caused gas spikes, and the continuing shrinkflation of basic necessities to be considered ‘luxury’. Bread for the fam shouldn’t be considered a luxury.
rather negligent of the article to ignore inflation
Also, while we note that high prices hurt directly, in major ways the Fed’s response to that (it’s been raising interest rates to reduce the money supply) is a major source of the pain associated with the high prices/price gouging we’re calling inflation.
Higher interest rates mean higher mortgage payments (or rent pressure), etc. This way, price gouging leads to higher profits, and if you hold bonds, also higher profits there- while consumers of those things are doubly-fucked
Undoubtedly. Many PPP loans were taken fraudulently as well (how many “businesses” do MTG and Matt Gaetz operate exactly?) so that had to have negative repercussions.
I do want to own a home at some point before death, so I’ve cut back spending across the board. I wouldn’t say I’m financially worse off, just working as many double shifts as possible (I work in healthcare, this is easy to do right now…also not a good thing) and not enjoying life at all for…3 continuous years now.
$115k needs to be your annual salary in USD to buy a home right now, supposedly, I read that somewhere (maybe CNN?) in the past 2 weeks. I make nowhere near that.
Factor in inflation on grocery prices & everything else, an mind you I shop at an Aldi’s and a wholesale club, it’s not a very easy time out there. Sometimes it feels like I’m saving for something totally unrealistic.
That’s the average salary needed to afford the average home.
But the average home in Miami or San Francisco is much more expensive than the average home in Wichita. And while prices are inflating everywhere, that does not mean you can’t afford a home without earning that much. The only thing that number tells you is that you need to earn more today than you did ten years ago.
I would talk to a bank about what kind of loan you can qualify for, and assume you can afford about half of that. Because they’ll absolutely lend you more than you can reasonably afford.
It doesn’t make that claim. It’s just that if you were wealthy between 2020 and now you can more easily navigate the price hikes by refinancing during the housing boom, sellings off assets, and shifting investments around.
But people in lower incomes don’t even have assets/savings to fall back on so they just lose harder when the prices hike.
Actually they are saying that if you were wealthy then you spin that wealth to increase your wealth. Whether that is drastically increasing profits. Using your connections to get free PPP money from the government. Etcetera…
We did not all lose something during Covid. The richest among us got a lot richer, and they continue to do so.
I think some people, myself included, managed to stay stable, so that’s probably a big chunk of it. I got a new job in June 2020 that was enough of a raise to make up for inflation, so while I’m not ahead of where I was 3 years ago, I was at least in the same mediocre position I started in. That said, I’ve had $3k in dental bills since July because dental insurance is pretty much a scam, soooo I’m now officially fucked, but I was doing ok.
What costs double? I track my expenses very closely and have for about a decade and my essentials are up 10% at most, 7% on average. That’s food, transportation, home expenses and cloth. My recreation expenses were actually down or flat.
I feel like sit down restaurants and fast food have gone way up. Maybe not double but it feels like it. Rent is also way up. Again not double but it seems that way. Maybe that’s just my area in South Florida though.
But yeah if you own your own home and cook all of your meals at home, really this inflation hasn’t hit you as hard.
I’m in a similar situation up here in Canada. Back then I could afford a house at a reasonable distance from town, even at current interest rates and with my significantly lower salary. Now I can maybe look at a small bungalow 1h out or more… if I assume I can keep working remotely indefinitely. Groceries just skyrocketed. Had to move in between, with high interest and low vacancy rates, we had to eat a big rent hike despite us moving way out of town.
The poorest 40% of households suffered an 8% drop in cash savings and the middle 40% (the U.S. middle class) also saw their bank deposits and other liquid assets topple. Only the wealthiest 20% of households are still enjoying the extra cash they stockpiled during the pandemic, with their savings about 8% above where they were in March 2020.
I’m not disbelieving your personal experience, but the article does indeed say it’s the top quintile who benefited.
A lot of us in healthcare stayed pretty stable. I don’t know of any that did “better”, but other than elective stuff, day to day dropped only a little. About 9-10% of Americans are in healthcare. I do know a lot of delivery services did well too.
And we now have the career experience from working Covid front lines combined with the aftermath of the Great Resignation, making us even more in demand. Yeah, I’m also one of the few doing better financially after Covid than before.
Well if your income increased more than inflation you might be fine. For my family this was the case and we have a fixed income mortgage as well so our expenses as a whole have gone up a lot less than inflation. I think this is true for a substantial minority of people.
Spending an extra 8% on groceries just means a bit less to savings? IDK, I kind of feel like the opposite. Economic dooming ahead of an election is as natural as the sunrise, especially when there’s a Democrat in office.
I may be a 1%er in this context. 49 at the start, had just scored a job paying double salary and benefits both (<-worked hard for this bit, for many years), Habitat for Humanity mortgage (no interest or land taxes), all that.
COVID killed mom (grandma really), got some inheritance, bought a couple of acres of swamp. It’s mine and I play there every weekend. Long story, but the land is a big deal in my life.
Went nuts buying stuff I always wanted and couldn’t afford before inflation really set in. I wouldn’t/couldn’t buy most of that stuff at these prices.
And now I’m about to get paid on the last of the inheritance and pay my little house off.
I know this sort of comment isn’t welcome, but you asked. Dumb luck mostly, and I recognize that.
And speaking of dumb luck, I’m getting married in 2-weeks to the finest woman I’ve ever met. (OK. I made a LOT of effort, but still, lots of luck as well) Been with a lot of women, so I’ve failed a lot, not this time. She’s gushing to her Filipina friends ATM. I don’t speak Tagalog or I might relate a bit of the conversation, all sounds good though. (Nothing private of course.)
People like me and my wife. Wife is in healthcare and I am in automation. Wife gets as much overtime as she wants and I got several pay raises as suddenly companies found that they couldn’t depend on just buying the same things forever and ran out of workers.
Oh don’t worry I am sure the boot is ready to crush us both like a bug. Just ignoring us for the time being.
So my wife and I are one of them. I’ll call it as it is, we got lucky, and both work in tech.
Now that said, I “rent” (rent in quotes because the amount is almost exactly what the increase in food costs was) out a room to a good friend because she was struggling, and just last week got another friend couch surfing for who knows how long until she can get her feet under her.
the problem is that one small group is holing the rest of us hostage, we needed to do the whole spending to ensure people could continue to afford food/housing etc… and that ended up going to everyone, just when it comes to repaying it, the hostage takers threatened to upend the economy if they have to pay it back, so it falls on the rest of us.
record profits as the average American is struggling to get by
Government spending is not the root cause. If that was the case, we would have seen inflation much sooner, since we’ve been in the era of quantitative easing ever since 2008. The fed was starting to raise interest rates even before covid because the post-2008 recovery was turning into an expansion; we are still in that expansion phase, and covid fucked up our supply chains which kick started the inflation that would have accompanied the expansion regardless, but would have been easier to control in normal times.
Yes. No doubt the economy took a hit at the start/height of the pandemic, but using that as a blanket statement to explain the linked article is unsubstantiated.
Edit:
Could also read the article.
The poorest 40% of households suffered an 8% drop in cash savings and the middle 40% (the U.S. middle class) also saw their bank deposits and other liquid assets topple. Only the wealthiest 20% of households are still enjoying the extra cash they stockpiled during the pandemic, with their savings about 8% above where they were in March 2020.
Given the American wealth distribution in 2023, just the top 10% of people hold 69% of wealth.
The article mentions the top 20% saw their savings increase.
I think it’s fair to extrapolate that America “as a whole” got richer (e.g. the economy is “doing better”), at the small cost of 80-90% of its inhabitants.
The pandemic has been a disaster for the average person, yet the wealthy used it as another opportunity to exploit them.
^(sidenote, “stockpiled” is a very apt descriptor…)
there is SO much money, as Levene in Glengarry Glen Ross says, “Just lying on the ground!”
However, we only allow certain people (businesses) to pick it up. We could give it to poor people and let the support of Ukraine continue. But we don’t. Because we ideologically have the position that businesses are people, and more important people than people people.
All it takes is the admission that “line go up” could be “line go up a little bit less steeply” and we can do it.
But no, the steepness of the line is more important than anything else.
Or, instead of that, we could spend just want we need to in order to literally defend our own shores and let our people have the abundant, full lives they deserve.
Canada only spends 26 billion a year on their military.
Mexico spends 8 billion.
All we’re doing is making a few warmongers rich and coming upw ith excuses to justify it.
No saying you are incorrect but the obvious conclusion to Russia -> Ukraine is North Korea -> South Korea, China -> Taiwan, etc etc. I have a problem letting more democratic countries fall to dictatorships. We’ve been here before and ended up losing 500,000 American lives to defeat (temporarily) fascism.
They should have been born to billionaire parents. I didn’t think it was necessary at the time and was born to average parents, and while I regret my decision, I don’t think I have the right to complain.
I know it’s hot to blame price hikes rn, and there’s some bullshit going on with housing prices, but I’m going to need to see some household budget details before I break out the violin.
I’ve seen so many otherwise-defined-as-adults make very poor financial decisions for decades. Lifestyle creep is real.
Everyone has a budget they stick to, right? This isn’t a years-long delay on an inevitable recession due to tonedeaf revenge spending to counter existential depression, right?
I think the biggest factor is probably the hyper inflationary period we’re exiting (have exited?) which many companies used as an excuse to jack up prices much further than they needed to. Anyone who did not receive a raise in the last 24-36 months has effectively received a 10-20% paycut.
I can feel it in my own families finances. I went back to college and now make as much as my wife and I did combined in 2020 while my wife is now a stay at home mom and the money isn’t stretching as far as it was in 2020. On the upside my income ceiling is now significantly higher than it was, and my wife wants to start working again once the kids are in school
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