As the cost of living soars and inflation bites into everyday expenses like groceries, the current economic downturn is undoubtedly affecting millions of American households.
Don't believe your lying eyes. Those sky-high grocery prices, four digit car payments and unaffordable mortgage interest rates? You just imagined it. The economy is booming, and it's doing better than ever. If it ain't broke, don't fix it. https://t.co/Sq7NcqGcBT
— Ian Miles Cheong (@stillgray) January 5, 2024
To add insult to injury, one of the most misleading government statistics of all time is the Consumer Price Index (CPI), which is a very important figure because so many government programs and American citizens rely on its data.
The CPI is often cited as the inflation rate. However, it actually represents the rate of increase in a “market basket” of services and goods as opposed to food and gas prices. The CPI that is reported every month doesn’t measure anything useful for most Americans, like gas, groceries, rental costs or home values.
Currently, the CPI is at 3.1%, which is down from its June 2022 high of 9.1%, but what does this tell us about how wages are failing to keep up with the skyrocketing gas and food price increases?
According to the Bureau of Labor Statistics jobs numbers, non-farm wages increased by 4.1% for the year, which is higher than the inflation rate of 3.1%. The issue concerns inflation-adjusted hourly wages for average, blue-collar, and middle-class workers decreased by 4.7%, which is an estimated $381 weekly decline in wages, according to the Bureau of Labor Statistics.
This drastic hit came only after President Biden took office, and Larry Kudlow, Trump’s former economic advisor, admitted, “The reason Biden polls so badly is that there’s a decline in wages and an increase in prices,” former Trump economic advisor Larry Kudlow told the Sun. This is what he calls the “affordability crisis.”
At the beginning of 2023, eggs averaged about $5 a dozen and milk $4 a gallon, but with stagnant wages and increasing inflation, many Americans are struggling to stay financially afloat.
Jerome Nathanial, the director of policy at City Harvest said in a recent interview that “people are struggling to afford housing, childcare, medical expenses, transportation, and balancing some of those fixed costs with their grocery bills, and their grocery bills are something they always viewed as a little bit more elastic.”
Nathaniel said City Harvest is the biggest food distributor for food banks and soup kitchens in New York City, and it has witnessed a 71% increase in demand for families with children since the beginning of the COVID lockdowns.
When children aren’t getting adequate nutrition, they have poorer overall health and have a harder time paying attention in class — creating a negative feedback cycle of hunger and poverty. This cycle creates an environment that increases the likelihood of food and economic instability for future generations according to the Food Research And Action Center.
So when the Biden administration brags about decreasing inflation, what they mean is they decreased the CPI, which is far from being the same thing.
