[The inflation rate is cooling, providing a respite for workers.
Yet there’s a reason why many are still unhappy with the economy:
from health care to housing to childcare, life in the US is more
unaffordable than ever. ]
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INFLATION IS SLOWING DOWN. BUT WORKING-CLASS LIFE IN THE US IS STILL
HARD TO AFFORD.  
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Branco Marcetic
September 6, 2023
Jacobin
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_ The inflation rate is cooling, providing a respite for workers. Yet
there’s a reason why many are still unhappy with the economy: from
health care to housing to childcare, life in the US is more
unaffordable than ever. _

,

 

In the ongoing hand-wringing over why Americans are so unhappy about
the economy, the cooling inflation rate has often been front and
center. CNN recently pondered
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the US public is still glum when there have been “months of
increasingly positive economic indicators,” noting
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the rise of the Personal Consumption Expenditures price index — the
metric the Fed uses as the benchmark for measuring inflation — had
slowed for the second month in a row.

It’s true the inflation rate these past few months has been lower
than in April and earlier, and barely even approaches the
near-double-digit year-over-year increases that we saw much of last
year. This is good news, especially if it means we’re more likely
to avoid
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recession and that the end of the Federal Reserve’s interest rate
hikes are on the horizon.

But it would be wrong to treat this as a triumph that wipes all the
lingering blemishes away or, worse, do as many commentators have been
doing
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cite it as one more reason unhappy Americans are a bunch of chumps
deluded about the state of the economy. The inflation _rate_ —
that is, the pace at which prices are going up — might be slowing
down, but that doesn’t mean prices are lower. In fact, they
are much, much higher
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kinds
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goods and services than they were three years ago. The sad reality is
that for the vast majority of workers, even with unemployment low
(which boosts labor’s power
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and low-wage workers seeing a historic boost
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incomes, the United States today is a far more expensive place to live
than it was before the pandemic.

Look at childcare, for instance. By July, the spike in childcare costs
had far outpaced
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general inflation rate, forcing parents to fork over thousands of
dollars a month or to drop out of the workforce to take care of their
kids. Earlier this year, President Joe Biden’s own Department of
Labor called
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price of childcare “untenable” based on _data from 2018_, ranging
from $5,357 to $15,417 a year in 2022 dollars — or between 8 and
19.3 percent of median family income for every child. Footing the bill
is about to get even harder, as the record level
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pandemic-era federal funding that came out of the 2021 Biden stimulus
is set to expire
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the end of this month.

Prescription drugs — which 66 percent
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all US adults use, often as a condition
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staying alive and healthy — have likewise blown past overall
inflation, with their whopping 31.6 percent
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increase as of July 2022 (the most recent figure) representing more
than three times the peak inflation rate last year. Americans are
paying two and a half
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for such medicine than people in similarly wealthy countries,
including neighboring Canada, with brand-name drugs nearly five times
higher
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An August survey
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that 28 percent of adults report struggling to afford their
prescriptions, including two-thirds of those making less than $40,000
a year; one-fifth didn’t fill a prescription because of the cost.
That’s millions of people. While the Inflation Reduction
Act’s provision
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Medicare to negotiate for lower drug prices is a landmark and
long-overdue step, it only targets ten drugs and kicks in three years
from now.

Housing is also wildly expensive in the United States, with house
prices
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hovering around all-time peaks. Even though housing costs leveled off
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year,
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rent remains
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at the record high it hit last year, while owning a home has arguably
never been more expensive (ironically made pricier by the Fed’s
inflation-fighting rate hikes, which have pushed
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interest rates to their highest level in more than two decades).
A record number
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Americans (21.6 million) are now spending more than 30 percent of
their pretax income on rent, eating into the wage gains routinely
cited by those who argue the economy is working well. Economists
recently determined [[link removed]] that
housing costs “at least fully offset” any wage gains that workers
made by taking jobs in high-paying industries in big cities, which
means low-wage workers — of which there are many
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America’s only growing
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areas — are being shafted even worse.

Meanwhile, Americans are paying substantially more than last year on
insurance premiums for their homes
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their cars
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and their health care
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That last one is particularly important, since already in 2021,
Americans were shelling out an average of $12,900
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health care, roughly double
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people in other wealthy countries spend. The average premium jumped 4
percent this year to $560 a month on average, and this is poised to
rise more, with insurers on the Affordable Care Act marketplace set
to propose
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median hike of another 6 percent next year. While the rise in health
care costs this past year was, in a break from the historical
trend, way surpassed
[[link removed](CPI-U)%2520for%2520medical%2520care%2520and%2520f] by
the rate of inflation, health care spending — which has shot up 114
percent since 2000, compared to 81 percent for all goods and services
— is still a major financial burden
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A November 2022 Gallup poll
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for instance, found a record share of Americans (38 percent) reporting
they or a family member postponed treatment due to the cost — up
twelve points from the year prior.

You can tell people all you want that the monthly numbers show
inflation is cooling and that the economy is due for a “soft
landing.” That doesn’t change the fact that most workers are
struggling to keep their heads above rising costs for life’s
essentials, made even harder by the ongoing rollback
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the pandemic-era welfare state. For most people, “inflation” means
they have less money in their bank accounts, and if they increasingly
can’t afford the things they need, all the encouraging macroeconomic
indicators in the world aren’t going to make them feel better about
the economy.

In an election year, that’s not a good thing for the party in
charge. Promising to do something about this — say, by running on
the hugely popular
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agenda that died on the vine in 2021, or even on simply reviving
expired pandemic protections — might give people a reason to vote
for you. Hectoring people they’re wrong about their own finances
probably won’t.

_Branko Marcetic is a Jacobin staff writer and the author
of Yesterday’s Man: The Case Against Joe Biden. He lives in
Chicago, Illinois._

* Working Class
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* cost of living
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* unaffordable rent
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* Child Care
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* Healthcare
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