Are you better off than you were four years ago? According to new figures out late last week, inflation has savaged the gains in household wealth millions of American families had hoped to earn.
The Wall Street Journal has the devastating charts, but before I get to those, the mainstream media and big-name opinion writers seem to be missing the point on inflation. Because Presidentish Joe Biden’s mal-management of the economy — and your family’s financial health — goes far beyond last month’s or even last year’s inflation figures.
The Financial Times fretted in a recent piece that “Biden’s re-election prospects are being dogged by persistent fears over inflation, with 80 percent of voters saying high prices are one of their biggest financial challenges,” despite “falling steadily last year.” The uptick in inflation during the first part of 2024 has reversed “recent gains the U.S. president had made among the electorate about his handling of the U.S. economy.”
In a similar vein, ABC News reported Saturday that American adults they surveyed “trust former President Donald Trump over President Joe Biden on the issue of inflation by a double-digit margin.”
Noah Smith — who gets a hat tip for the previous two links — is a little closer to the point in today’s Noahpinion column but still shy of the mark:
People are still understandably panicky after the experience of 2021-22. But the more recent surge was not just a temporary bump — underlying inflation is running at around 3.5%, which is considerably more than the rates that prevailed before Covid.
Indeed. And it’s still running ahead of most Americans’ wage growth. I’ve seen various estimates, but the typical worker’s earnings, adjusted for inflation, are between 4%-6% lower than they were before inflation began in earnest in 2021. Some common items, such as groceries, dining, rent, and house payments, have increased in price even faster than the average inflation rate. That means we’re spending more of our smaller paychecks on the necessities and less on the luxuries.
But that’s what matters paycheck to paycheck. We’re also looking at our long-term term household finances and they tell the same story.
While the Dow Jones is way up — benefitting mostly the top 20% of Americans — that Wall Street Journal report said that a “better measure of financial health is net worth: all assets, including stocks, bonds, cash and property, minus debts.”
“Total household net worth rose 19% through Biden’s first three years in office, according to Federal Reserve data—not much less than the 23% through Trump’s first three years.”
Unless, that is, you count inflation.
“Adjusted for inflation,” the WSJ reported, “net worth was up just 0.7% through Biden’s first three years, compared with 16% through Trump’s first three years.” [Emphasis added.]
We’ve struggled mightily these last three years, and the best most of us have done is tread water.
It isn’t just the stagnation that hurts; it’s the time we’ve lost. We’re paying 2024 prices with 2020 wages. And our retirement plans either got pushed out three more years into the future or we’ll have to make do in retirement with three years less savings to rely on.
We aren’t better off than we were four years ago, and Bidenflation is to blame.
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