As the 2024 U.S. presidential election draws closer, America’s economic performance since 2021 amidst rising living costs is looming large in public discourse as the Biden administration readies itself to a rematch with former President Donald Trump.
Three years of the novel coronavirus pandemic and lockdowns, as well as global shocks caused by the Russo-Ukrainian war and other crises have contributed to the economic turbulence felt by millions of ordinary Americans struggling to keep up with rising costs of everyday goods and other expenses. ‘
U.S. inflation officially reached a high of 9.1 percent in June 2022, and has receded to 3.4 percent as of this April.
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By contrast, according to Macrotrends.net, inflation of the U.S. dollar stayed within the 0–2 percent range all throughout the 2010s, reaching just 0.12 percent in 2015.
The Federal Reserve is targeting a rate of 2 percent, but some economists say that Americans should be prepared for long-term devaluation of the dollar, and with it higher living costs.
Biden: ‘We have a lot more to do’
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The drop in inflation from the months following the February 2022 Russian invasion of Ukraine — as well as over a year of heavy pandemic-era stimulus spending — has led hopeful observers to speculate on the possibility that the Federal Reserve will cut interest rates.
Intended to fight inflation, the Fed’s high interest rates since Biden took office in 2021 have dampened would-be borrowers looking to invest or start businesses, and have put home ownership further out of reach for many middle- or lower-income Americans.
Interest for a 30-year fixed home loan is currently around 7 percent, compared with around 3 percent or lower in early 2020.
President Joe Biden has acknowledged that while inflation has fallen, “many families are struggling, and we have a lot more to do.”
“That’s why I have a plan to lower housing costs, lower prescription drug prices, and lower child care costs,” he wrote in a May 15 post on X, formerly known as Twitter.
In addition to high interest rates, the glut of pandemic stimulus funding at the end of the Trump administration and beginning of Biden’s term has contributed further to housing shortages.
While ordinary consumers spent their stimulus checks on everyday purchases or expenses, investment management firms such as BlackRock and Vanguard funneled the cash into buying up available property across the country. Real estate prices have stayed around the same or gone up since the pandemic.
Tightening finances
The overall price of goods in the U.S. has increased by 20 percent since the Biden administration took office in January 2021. Gas has risen by more than 55 percent, while food and housing prices have grown by 21 percent each, according to data from the U.S. Bureau of Labor Statistics.
Economic woes could play a significant role in the U.S. general elections to be held on Tuesday, Nov. 5. An ABC News/Ipsos poll found that economics and inflation rank high among the most important problems for prospective voters.
More Americans trust Trump on these issues over Biden, according to the poll results.
The worsening economic situation is compelling many Americans to turn to cheaper substitute goods, and growing numbers of older people are tapping into their retirement funds to make ends meet in the short term.
According to a new Adobe Analytics report studying the internet shopping habits of consumers from January 1 to April 3, low-cost items accounted for a substantial share of online sales compared to five years ago.
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The share of unit sales that came from the cheapest quartile of goods rose by 96 percent in personal care, 64 percent in electronics, and 47 percent in apparel.
Amazon CEO Andy Jassy said recently that shoppers are becoming increasingly “cautious, trading down on price when they can and seeking out deals.”
Rising living costs are also affecting retirees, who stand to take a significant purchasing power hit in the coming years.
Internal data from investment firm The Vanguard Group revealed that in the year of 2023, 3.6 percent of its participants made a “hardship withdrawal” from their 401(k) savings, up from 2.8 percent in 2022.
In a recent report published May 15, Boston College projects that middle-income retirees will see a 14.2 percent decline in their financial wealth between 2021 and 2025 due to inflation.
Millions of Americans are also resorting to prescription drugs sourced from Canada, Mexico, and other countries to get around the exorbitant prices that are notoriously characteristic of the U.S. pharmaceutical industry.
In many cases, buying such drugs from overseas is technically illegal.
