https://us.cnn.com/2023/08/11/economy/inflation-rate-spending/index.html
US inflation has had a snowballing effect on family budgets.
The typical American household spent $709 more in July than they did two years ago to buy the same goods and services, according to Moody’s Analytics.
That figure underscores the cumulative impact high inflation has had on consumer finances — even as price growth has cooled considerably in recent months.
“High inflation of the past 2+ years has done lots of economic damage,” Mark Zandi, chief economist at Moody’s Analytics, wrote in a post on X, the platform formerly known as Twitter.
Most of that increase in spending is driven by housing costs, which have surged, Zandi told CNN in an email on Friday. He added that families are also spending more at the grocery store; on buying, maintaining and insuring vehicles and on recreational services like cable.
Of course, paychecks have also grown over the past two years — but not by as much as the cost of living.
Inflation-adjusted earnings are stuck in 2019
Even though prices have soared, real earnings, which adjust for inflation, are stuck at late 2019 levels.
“Real earnings remain below what they would have been if not for the pandemic and the Russian war, which is weighing on the collective psyche,” Zandi told CNN in an email on Friday.
The good news is that wages are finally starting to outpace inflation and consumer price growth has eased significantly, so much so that many investors are betting the Federal Reserve is done raising interest rates.
Americans’ wages are finally outpacing inflation. Here’s why it may not last
Looking at just the last year, Zandi calculates that the typical household spent $202 more this July than they did a year ago to buy the same goods and services.