Economic issues top Americans' concerns heading into the midterm election, as families are increasingly suffering from inflation, pain at the pump, and seeing their retirement savings getting wiped out. Some Americans are having to go as far as selling their cars to afford food, others are changing what they normally purchase, and food pantries across the country are nearly empty thanks to Biden's Build Back Better agenda.
While Americans are feeling these effects every day, how much of a cumulative loss in income are these devastating economic realities causing? The Heritage Foundation conducted an analysis to find out.
Consumer prices have risen 12.7% since January 2021, significantly faster than wages, so that the average American worker has lost $3,000 in annual purchasing power. Further, as the Federal Reserve implements tighter monetary policy to reduce inflation, interest rates are rising. Higher rates have in turn increased borrowing costs on mortgages, vehicle loans, credit cards, and more. The higher interest rates and borrowing costs have effectively reduced the average American’s purchasing power another $1,200 on an annualized basis. (The Heritage Foundation)
In sum, that amounts to a loss of $4,200 in annual income for average Americans since President Biden took office.
The "financial catastrophe" is a result of Democrats' addiction to spending and the Federal Reserve enabling it, according to Heritage Foundation research fellow EJ Antoni.
"Instead of correcting course over a year ago when inflation began rising, the Biden administration and Congress continued the profligate spending spree and the Fed let the printing presses roll. Many Americans have taken on additional debt to cope with higher living costs," he said. "Now, the Fed is finally fighting inflation, which is pushing up interest rates and increasing financing costs. Rates on all kinds of consumer debt are rising. Mortgage interest rates have doubled since Biden took office, greatly increasing Americans' monthly payments.
"We are in a vicious spiral, but it's one of Joe Biden, the Democrat-controlled Congress, and the Fed's own making," Antoni added.
