Biden’s Inflation Surge Hits Americans Who Can Least Afford It

‘Americans At The Low End Of The Income Rung Are Once Again Struggling To Make Ends Meet’

“Americans at the low end of the income rung are once again struggling to make ends meet…. While wealthier shoppers continue to splurge, low-income shoppers have pulled back faster than expected in the past two months. They’re focusing on necessities while turning to cheaper items or less expensive stores. And they’re buying only a little at a time.” (“Inflation Divide: The Wealthy Splurge, The Poorest Pull Back,” The Associated Press, 6/05/2022)

• “[I]nflation has taken a bigger bite out of personal budgets and wiped away some of the wage gains, especially for those who earn less. The national average cost of a gallon of gas, for example, has jumped to $4.76 from $4.20 a month ago and a painful 56% from a year earlier, according to AAA.” (“Inflation Divide: The Wealthy Splurge, The Poorest Pull Back,” The Associated Press, 6/05/2022)

• “[T]he poorest one-fifth of Americans have exhausted the savings they’d built up during the pandemic in part through stimulus checks, child tax credit payments and higher wages, according to calculations by Jeffries, an investment bank.” (“Inflation Divide: The Wealthy Splurge, The Poorest Pull Back,” The Associated Press, 6/05/2022)

And Food Banks That Serve People In Need Are Struggling As ‘Food Costs Are Spiking Amid Dwindling Donations’

“At the Northern Illinois Food Bank, which feeds people in 13 counties … the average monthly number of visits grew to more than 400,000 in the February through April period, from 311,000 in the July through September period, according to president and CEO Julie Yurko…. For the Northern Illinois Food Bank — like many food banks — food costs are spiking amid dwindling donations. ‘Inflation and rising food costs mean the food bank has to make tough choices about our budget,’ Yurko said. ‘What foods can we provide consistently and what foods can we only provide if they are donated to us?’” (“Inflation Divide: The Wealthy Splurge, The Poorest Pull Back,” The Associated Press, 6/05/2022)

‘Surging Home Prices And Rents Are Cascading Down To The Country’s Mobile Home Parks’

“Surging home prices and rents are cascading down to the country’s mobile home parks, where heightened demand, low supply and an increase in corporate owners is driving up monthly costs for low-income residents with few alternatives…. Mobile homes have long been one of the country’s most affordable housing options, particularly for families who do not receive government aid. About 20 million Americans live in manufactured homes, which make up about 6 percent of U.S. residences, according to federal data. Some experts suggest those numbers could soon rise as more people are priced out of traditional houses and apartments.” (“‘We’re All Afraid’: Massive Rent Increases Hit Mobile Homes,” The Washington Post, 6/06/2022)

“Mobile homes prices range from less than $25,000 in Nebraska, Iowa and Ohio, to more than $125,000 in Washington state. Overall, they tend to be three to five times cheaper than traditional single-family homes, according to an analysis of census data by LendingTree. But rising demand for affordable housing has put particular pressure on the market. Nationally, the average sales price of manufactured homes has risen nearly 50 percent during the pandemic, from $82,900 to $123,200, census data shows. Meanwhile, average new home prices rose 22 percent in that period, according to government figures.” (“‘We’re All Afraid’: Massive Rent Increases Hit Mobile Homes,” The Washington Post, 6/06/2022)

‘We’re All Afraid Of Losing Our Homes,’ ‘There’s No Way To Keep Up. Do You Pay Rent Or Get Your Medicine Or Buy Gas To Take Your Kid To School?’

“In interviews with a dozen mobile home residents around the country, all said their rents had risen this year. Most reported increases of 10 to 25 percent, although some said monthly payments had doubled or tripled. Their options were increasingly limited, too: Many said they had bought trailers after being priced out of apartments, homes and condominiums and were now unsure of where to go next. They had used up their savings or taken on high-interest loans to buy manufactured homes with little resale value. Some were considering moving into motels, crashing with friends or living in their cars until they could find a more permanent arrangement.” (“‘We’re All Afraid’: Massive Rent Increases Hit Mobile Homes,” The Washington Post, 6/06/2022)

• “For nearly 30 years, Virginia Rubio has lived in a trailer park in Forks, Wash., where monthly rent teeters around $350. Now it’s shooting up to $1,000. Rubio, a retired home-care aide who lives on food stamps and $860 in Social Security each month, says there’s no way to make the math work. She owns the mobile home she shares with her partner and adult daughter but will soon have to give that up if she can’t afford to rent the plot of land underneath it. ‘With an increase like this, I don’t know what we can do,’ said Rubio, who is 75. ‘We’re all afraid of losing our homes.’” (“‘We’re All Afraid’: Massive Rent Increases Hit Mobile Homes,” The Washington Post, 6/06/2022)

• “Christy Andrews thought she was making a sound investment when she scooped up a mobile home for $5,000 in Torrance, Calif., six years ago…. Her lot rent — the monthly fee she pays for the plot of land where her trailer is parked — has nearly doubled, to $1,700, in the six years she has lived at Knolls Manor and now takes up nearly all of the $1,900 a month she receives in Social Security disability checks. ‘It’s horrible,’ said Andrews, 43, who left her sales job in the aerospace industry because of kidney failure. ‘There’s no way to keep up. Do you pay rent or get your medicine or buy gas to take your kid to school?’ The only way to move, she said, would be to give up the only home she has ever owned. Nearby rents are astronomical: Studios can easily cost $2,000 a month, and two-bedrooms are closer to $3,000.” (“‘We’re All Afraid’: Massive Rent Increases Hit Mobile Homes,” The Washington Post, 6/06/2022)

• “Linda denOuden traded in a two-bedroom apartment near Portland, Ore., for a mobile home last year thinking it would be a good way to save money after her husband died. She used money she received from his life insurance policy to buy a $70,000 unit. But her lot rent is going up nearly 10 percent to more than $1,000 a month, making it just about impossible for her to make ends meet on Social Security and a small pension. The 68-year-old has started putting off routine doctors visits and mammograms to save money. It has been years since she went to a dentist. ‘Living on a fixed income means there is no room for extra expenses,’ she said. ‘I am one catastrophe away from losing everything I have left. It’s a never-ending worry I live with every day.’” (“‘We’re All Afraid’: Massive Rent Increases Hit Mobile Homes,” The Washington Post, 6/06/2022)

Retirees On Social Security Are Running Up Against A Tax Not Indexed For Inflation, Eroding Their Incomes

“A tax on Social Security earnings isn't indexed for inflation, and it's pulling in more older Americans…. While Social Security benefits increase along with rising prices, and seniors just received a fat cost-of-living adjustment, the threshold at which they can begin to owe taxes on that money is not adjusted for inflation — and hasn’t been changed since the Reagan administration. Since 1984, Social Security recipients have become subject to tax on their benefits when they make more than $25,000 as individuals and $32,000 for couples. Now, government forecasters say surging inflation is pushing more people over those limits. It’s a big reason why the nonpartisan Congressional Budget Office sees the share of Social Security benefits subject to tax growing by 10 percent this year and another 10 percent next year. It predicts total income taxes paid on those checks will jump this year by 37 percent.” (“Inflation Strikes Twice For Many Retirees,” Politico, 6/05/2022)

Gas Prices Have Doubled Since President Biden Was Sworn Into Office

“Gas prices have more than doubled under President Biden's administration. Since Biden took office in January 2021, the price for a gallon of gas has doubled. On Jan. 20, 2021, the average price for a gallon of gas nationwide was approximately $2.39. As of Saturday, the price for a gallon of gas has skyrocketed to $4.81, up five cents from Friday, according to AAA.” (“National Gas Prices Have Doubled Since Biden Took Office,” Fox Business, 6/04/2022)

‘In 10 States, A Gallon Of Gas Now Costs More Than $5’

“U.S. gas prices hit a new record on Monday, with a gallon of regular gas costing an average of $4.865 (not adjusting for inflation), according to the most recent data from AAA. The highest average price — $6.34 — is in California, but 10 states have now surpassed the $5 mark. The higher prices hit hard in the past week, when Americans hit roads and highways for the Memorial Day holiday travel.” (“In 10 States, A Gallon Of Gas Now Costs More Than $5,” NPR, 6/06/2022)

• “The biggest weekly shock came in states such as Michigan, Illinois and Indiana — all of which saw gas rise by more than 40 cents in the past week. Another nine states seem poised to hit the $5 threshold, including Pennsylvania ($4.95), and Massachusetts ($4.96).” (“In 10 States, A Gallon Of Gas Now Costs More Than $5,” NPR, 6/06/2022)

Overall, ‘Americans Are Changing Their Shopping Habits Because Of Soaring Food Prices,’ ‘Opting For Cheaper Items … And Buying Only The Essentials’ While ‘Dining Out Less Or Consciously Spending Less When Dining Out’

“Americans are changing their shopping habits because of soaring food prices. And disruptions in the international farming community have some worried about the food supply heading into 2023. The BMO Real Financial Progress Index, a quarterly survey from BMO and Ipsos, shows that 42% of surveyed adults ‘are changing how they shop for groceries,’ including ‘opting for cheaper items, avoiding brand names and buying only the essentials.’ The report found ‘46% are either dining out less or consciously spending less when dining out.’” (“As Food Prices Soar With No End In Sight, Americans Change Habits,” The Center Square, 6/05/2022)

Meanwhile, ‘Rampant Inflation Will Result In A Delayed Retirement For A Large Swathe Of Americans Who Are Concerned About Dwindling Savings Accounts And Tight Budgets’

“Rampant inflation will result in a delayed retirement for a large swathe of Americans who are concerned about dwindling savings accounts and tight budgets, according to the results of a new survey published this week. With the costs of daily necessities such as food and fuel hitting record highs, 25% of Americans will need to delay their retirement to account for the reduced savings, according to the quarterly BMO Real Financial Progress Index. ‘Prices across the board – from cars and gasoline to groceries and other everyday essentials – are rising at the fastest pace since the 1980s,’ said Paul Dilda, the head of consumer strategy for BMO Harris Bank. ‘Consumers must think differently about their finances in this inflationary environment.’” (“Inflation Will Force 25% Of Americans To Delay Retirement: Survey,” New York Post, 6/01/2022)

Unsurprisingly ‘Some 83% Of Respondents Described The State Of The Economy As Poor Or Not So Good’ While The Highest Level Of Americans Are Dissatisfied With Their Financial Situation On Record Since The Early 1970s

“Americans are deeply pessimistic about the U.S. economy and view the nation as sharply divided over its most important values, according to a new Wall Street Journal-NORC Poll. … Some 83% of respondents described the state of the economy as poor or not so good. More than one-third, or 35%, said they aren’t satisfied at all with their financial situation. That was the highest level of dissatisfaction since NORC began asking the question every few years starting in 1972…” (“Inflation, Political Division Put U.S. in a Pessimistic Mood, Poll Finds,” The Wall Street Journal, 6/06/2022)

• “Just over one quarter of respondents, 27%, said they have a good chance of improving their standard of living—a 20-point drop from last year—while just under half of respondents, 46%, said they don’t. The share of respondents who said their financial situation had gotten worse in the past few years was 38%. That marked the only time other than in the aftermath of the 2007-09 recession that more than three in 10 respondents said their pocketbooks were worse off, according to GSS data going back a half-century.” (“Inflation, Political Division Put U.S. in a Pessimistic Mood, Poll Finds,” The Wall Street Journal, 6/06/2022)

Treasury Secretary Yellen Admitted She Was Wrong About Publicly Downplaying Inflation, And Her Biographer Claimed She Privately Warned That The American Rescue Plan Was Inflationary And Needed To Be Scaled Back

CNN’s WOLF BLITZER: “Was it a mistake, Madam Secretary, to downplay this inflation risk? Did that contribute to the problems we're all seeing right now?”
SECRETARY JANET YELLEN: “Well, look, I think I was wrong then about the path that inflation would take. As I mentioned, there have been unanticipated and large shocks to the economy that have boosted energy and food prices, and supply bottlenecks that have affected our economy badly, that I at the time didn't fully understand. But we recognize that now. The Federal Reserve is taking the steps that it needs to take. It's up to them to decide what to do.” (CNN’s “The Situation Room with Wolf Blitzer” 5/31/2022)

“Janet Yellen, worried by the specter of inflation, initially urged Biden administration officials to scale back the $1.9 trillion American Rescue Plan by a third, according to an advance copy of a biography on the Treasury secretary. ‘Privately, Yellen agreed with Summers that too much government money was flowing into the economy too quickly,’ wrote Owen Ullmann, the book’s author and a veteran Washington journalist, referring to former Treasury Secretary Lawrence Summers, who severely criticized the size of the aid plan.” (“Yellen Wanted Biden Relief Plan Scaled Back, Biography Says”, Bloomberg, 6/03/2022)

• “Yellen’s concern about inflation ‘is why she had sought without success to scale back the $1.9 trillion relief plan by a third early in 2021 before Congress passed the enormous program,’ wrote Ullmann, who had ‘unfiltered access’ to Yellen as he researched the book, according to publisher PublicAffairs. Ullmann wrote, ‘She worried that so much money in the pockets of consumers and businesses would drive up prices at a time when the pandemic had caused severe shortages of goods that were in unprecedentedly high demand.’” (“Yellen Wanted Biden Relief Plan Scaled Back, Biography Says”, Bloomberg, 6/03/2022)

Larry Summers And A Team Of Economists Calculated That The Current Inflation Is Closer To The 1980 Peak Than Current Metrics Show

“US inflation is running even closer today to its 1980 peak, fresh analysis of historical price data shows, suggesting to the authors of the study that the Federal Reserve’s task of bringing price gains back to its target is similar in scale to that of then-Chair Paul Volcker. A group of economists including former Treasury Secretary Lawrence Summers recalculated historical readings for the consumer price index to apply modern-day spending patterns, especially for housing. After adjustments, the figures showed that core inflation ran at an estimated 9.1% in June 1980 -- versus the reported peak of 13.6%, the paper by economists Marijn A. Bolhuis, Judd N. L. Cramer and Summers said. That means that the aggressive monetary tightening that Volcker implemented in the early 1980s brought the core inflation rate down by 5 percentage points -- not by the 11 points in the official annals. And that in turn suggests the Fed’s job today is of a scale closer than previously thought to Volcker’s -- which involved a deep recession.” (“US Inflation Nearer 1980 Peak Than Thought, Summers Group Says,” Bloomberg, 6/06/2022)