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In the dead-woke world of the Presidential Reality Show®, where the President takes the stage to brag about strong GDP growth and rising wages for the plantation workers of Slavelandia, the average U.S. household is laying out an extra $276 a month to cover the rise in prices over the past year, according to a study released last week by Moody’s Analytics.
Prices have increased across virtually all categories, including for basic items such as clothing, fuel, groceries, and housing (see related story in this issue).
U.S. inflation soared to a 40-year high of 7.5 percent in January and has been above 5 percent for the past eight months.
The study compared average household expenses under 7.5-percent inflation with the same expenses when inflation was 2.1 percent, its average rate through 2018 and 2019.
Middle-class households felt the pinch the most, paying 6.7 percent more in December, a half-point more than lower and higher income groups. And in 2020, median household income had its sharpest decline on record.
The middle class also is paying more for gasoline and used vehicles. Higher earners tend to buy new cars, prices for which increased at a lesser pace, the study noted.
Higher-earning households spent more on restaurant meals and recreation, costs of which rose less than inflation overall.
Hispanic households saw inflation at a rate of 7.1 percent, also due to the rising cost of fuel and used cars.
Consumers ages 35 through 44 were hit hardest, paying 6.9 percent more overall, though younger consumers saw their costs rise almost as much.
Adults 65 and older were burdened by a 5.8-percent inflation rate, with 16 percent of their incomes devoted to healthcare.
TREND FORECAST: Remember the 1992, Bill Clinton campaign theme? “It’s the economy, stupid.”
Now, 30 years later, with the upcoming midterm Congressional elections, “It’s the economy, stupid,” because economic reality consists of what consumers feel in their wallets, and inflation will be the chief issue in this year’s political freak show.
Democrats will reverse course in the weeks ahead, downplaying plans to spend trillions more on social infrastructure and talking up job creation, wage growth, and other larger indicators of economic improvement.
Although Republicans have offered no plans to counter inflation, or any kind of blueprint for governance, they stand to reap the benefits of the $276 “inflation tax” that the Fed has helped to charge us with.
However, in the lead up to the 2024 Presidential Reality Show®, we forecast interest rates will dramatically drop so those in control of the White House now can stay there for another four years.