On Friday, USA Today posted an article about inflation and the impact it has had on the lower and middle classes in America.
The article notes:
Putting “fun” back into low- and middle-income Americans’ budgets could be years away with most of their income barely covering the surge in costs for bare necessities, economists said.
Even with annual inflation last month cooling to the lowest level since February 2021 and wages rising faster than inflation, low- and middle-income Americans are just barely covering their essentials, which include groceries, shelter, utilities and gasoline, economists say.
That’s because when inflation slows, it only means prices aren’t rising as quickly, not that prices are declining. So, Americans continue to pay higher prices for everyday needs.
Low- and middle-income Americans were hit disproportionately harder than their higher-income peers because essentials account for a larger share of their budgets, and their discretionary spending, or spending on nonessential items like dining out, vacations and entertainment, is only just recovering, economists say.
…Middle-income Americans’ purchasing power, after being sharply eroded during the 2021-2022 inflation shock, just recently moved above 2019 levels, according to the monthly Primerica Household Budget Index (HBI). HBI assesses whether families can get ahead financially or if they may fall behind based on the affordability of everyday necessities needed to manage their homes and changes in their earned income.
…Air conditioning, watering the garden and visiting family were “luxuries” Amy Aaroen, 63, cut back on last summer.
The article asks the question:
Will upcoming holiday spending be affected?
Low and middle-income consumers will probably still be bargain-hunting this holiday season, analysts said.
“We are continuing to see inflation’s impact on the middle-class consumer,” said Adam Davis, managing director at Wells Fargo Retail Finance. “Discretionary spending on larger ticket items is down, which could indicate holiday budgets may tighten, and certain consumers might even trade down on items, with many actively looking for bargains.”
Aaroen says that through belt-tightening during the year, “we’ve somehow managed to keep a budget that will probably not affect our coming holidays too much. We have 11 grandchildren and usually spend $25 to $30 on each of them. And we will probably this year as well. We may need to use the credit card though.”
And “yes, we will definitely see family for the holidays,” she said. “But not as often in between.”
Elections have consequences. If you want four more years of inflation and increased government spending, vote for Kamala Harris.