Americans Need Extra $11-14,000 Just to Keep Up: 'You Can't Wiggle Out of Buying Food'
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Americans have been feeling a financial squeeze for several years due to record-high inflation, but new data reveals how much consumers have to spend just to keep up with a basic standard of living.
The average household must spend an additional $11,434 annually just to maintain the same standard of living they enjoyed in January of 2021, according to a new report from Republican members of the U.S. Senate Joint Economic Committee.
The report examines government data like the Consumer Price Index and Consumer Expenditure Survey to analyze the impact of inflation by state. The results: many Americans are still struggling to keep up with skyrocketing costs.
"Middle- and low-income Americans aren't doing well enough — they are living fragilely on the edge," Gene Ludwig, chairman of the Ludwig Institute for Shared Economic Prosperity (LISEP) told CBS News.
LISEP is a think thank whose own analysis found that Americans needed almost $14,000 of additional income to cover basic goods, on average, in 2022.
"Food costs and basic costs are up more than other costs," Ludwig added. "Putting on a Thanksgiving dinner costs the same if you're a lower- or upper-income American, but for a lower-income American it's a bigger portion of your spending."
Although new Commerce Department data out Thursday shows cooling inflation, prices are still three percent higher than this time last year, and still much higher than they were several years ago.
"Unfortunately, inflation is settling at 3 percent. It has been trending down, but if you look at the monthly increases over the last year, what you find is that 3 percent has essentially become the new baseline. In other words, there's no sign that we're going any lower from here on out," E.J. Antoni of the Heritage Foundation told CBN's "Faith Nation," in July.
Meanwhile, the White House claims "Bidenomics" has helped to ease inflation, and a Biden spokesperson recently told CBS the U.S. Senate Joint Economic Committee's report was "flawed."
"14 million more Americans have jobs today than when President Biden took office and household disposable income is up by almost $21,000 since December 2020," the spokesman claimed in a statement to CBS MoneyWatch. "And what Congressional Republicans pushing this one-sided study won't admit is that their proposals would raise costs on the middle class and cut Social Security and Medicare so they can give rich special interests more tax giveaways."
But a new independent Bankrate survey finds that 60% of working Americans' income has lagged inflation over the past 12 months.
Food, transportation, housing, and energy are a few categories where consumers are finding it the hardest to keep up.
A pound of ground beef was $3.89 in January 2020 but now costs $5.23 on average. Prices for fresh fruits and vegetables have risen by nearly 14%, Bloomberg.com reports.
"I don't see any other way than food overall is going to be taking a higher share of people's disposable income than before," said Brandon McFadden, a professor in food policy economics at the University of Arkansas. "You can't wiggle out of buying food."
Electricity bills have climbed by 25% since January 2020, and natural gas is up 29%.
Ted Rossman, Bankrate senior industry analyst, explained, "Prices are still rising for the most part, but they're rising at a slower rate. That is still an obstacle for consumers. You know, you think about building off this ever higher base. I mean, that's a really big deal for bigger ticket items like rent; shelter costs are actually driving about 70% of that monthly inflation increase. So that's still a real trouble spot. "
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