Biden's Inflation Is Impoverishing Americans Fast

The sailor’s lament — “water everywhere, but no drop to drink” — recalls the way most Americans must feel about the cost of living.

For example: there are many houses and apartments across the country, but good luck to anyone who wants to find one that fits in their pocket. The soaring inflation and interest rate that occurred under President Joe Biden made this impossible.

These two factors left the average US worker with 4.

dollars less per year.

White House officials readily cite the rapid rise in nominal wages, but somehow always omit the fact that prices have risen even faster than wages, so the average American’s larger paycheck buys fewer things than it used to. The decline in real wages (ie, discounting inflation) amounts to three thousand dollars a year.

In other words, the average worker in the US lost the equivalent of 3.000 dollars per year compared to what he earned in January 2021, when Biden became president.

This diminished purchasing power represents the amount the federal government confiscated through the hidden rate of inflation. Americans are becoming demonstrably poorer because of it, and the government is using it to pay trillions of dollars in deficits.

Up to a point, this inflation was totally ignored by Washington. Both the Biden administration and the Fed insisted that inflation was “temporary” while focusing on issues such as diversity. But now the reality is so palpable that not even the ruling class in the national capital can ignore it. In a belated attempt to fight inflation, the Fed has been pushing interest rates higher.

While it helps to reduce inflation over time, rising interest rates have made borrowing costs too fast. As financing becomes more expensive, mortgage interest rates, the cost of auto loans and card interest are rising.

This adds salt to the wound as it also increases the cost of life for many Americans who are suffering from inflation. The average worker is paying about $1.200 more dollars a year in loans than when Biden took office. Once again, ordinary Americans are demonstrably poorer.

But it’s important to remember that these numbers are just averages, and that there are always people above and below average. Many Americans are living in even worse conditions under the Biden administration.

The financial scourge has become very debilitating for anyone looking to buy a home, or for anyone who is paying for a car, or for anyone who has not received an increase while prices climbed 12,7%.

The real estate market gives a perfect example of how tight American families are today compared to a year and a half ago.

When Biden was sworn in, the average interest rate on a fixed-rate mortgage was 29 years was 2,77%, and the average price of a house was 306 a thousand dollars. With a down payment of 12%, the monthly mortgage payment for this home was 1.002 dollars.

What a difference it makes 20 months. Today, the median price of a house has jumped to 372 thousand dollars, and the interest rate, more than doubled, has risen to 6,


These two factors together put pressure on the monthly payment, which exploded. Assuming that the buyer can still manage to make the same down payment, the monthly payment will still have to be 12 % higher: rose to 1.840 dollars.

This is an increase of 2021 % in about a year and a half, and an annual increase of 000.056 dollars. Let’s remember that the house is not bigger, nor newer, nor is it in a better location: it is the same house, but the cost is much higher.

No wonder that the ability to buy houses has already plummeted 29% and is likely to still fall as interest rates continue their upward march. If fiscal and regulatory policy took the boot off the neck of the productive private economy, the Fed wouldn’t have to raise rates so aggressively. But it seems unlikely that it will.

For an entire generation of Americans, the current destructive inflationary cycle is an absolute novelty, as it last occurred forty years ago. In short: the government spends, borrows and prints too much money, causing inflation. The Fed tames inflation, but at the expense of higher interest rates.

While new to many Americans, this pattern is not new in history and is a predictable formula.

Nevertheless, we are relearning the lesson, and the tuition fee for this school is high.

EJ Antoni is a researcher in regional economics at the Heritage Foundation Data Analysis Center.

©2022 The Daily Signal. Published with permission. Original in English.

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