President Joe Biden recently took to a stage in North Carolina to tout his economic agenda, which includes bringing high-speed internet to rural America. But that’s hardly what Americans struggling with a cost-of-living crisis need to hear.
Millions of Americans have been terribly frustrated with the economy over the last three years, as witnessed by countless economic polls. While several aggregate numbers like gross domestic product (GDP) and its largest component, consumer spending, may paint a rosy picture, millions of Americans are economically worse off than they were three years ago.
After annual inflation outpaced earnings growth for a record 26 consecutive months, real (inflation-adjusted) incomes are down about 4.5 percent compared to January 2021. Yet President Biden claims “we’re doin’ pretty damn well economically.”
While President Biden claims that real earnings have risen for the bottom half of workers, data released by the Bureau of Labor Statistics (BLS) mere hours before President Biden spoke show real earnings have fallen 1 percent for the bottom half of workers during his tenure.
People are struggling to make ends meet, with credit card debt at a record $1.1 trillion while 60 percent of Americans live paycheck to paycheck. This is despite a record number of Americans having multiple jobs as they try to boost their lagging real incomes.
Having maxed out their credit cards, Americans turned to alternative financing options, like buy-now-pay-later plans, to cover their holiday spending. Meanwhile, a quarter of Americans still haven’t even paid off their holiday debt from 2022.
It’s no wonder that defaults and delinquencies on consumer debt like credit cards are rising at the fastest pace since the Global Financial Crisis.
However, official inflation metrics like the consumer price index (CPI) are understating the cost-of-living crisis by underestimating inflation, mostly because of methodological changes over the years. This is especially true for housing, which has seen affordability plummet over the past three years.
According to the Federal Reserve Bank of Atlanta, the median-priced home is affordable with the median income in only one metropolitan area (population of at least 500,000) in the whole country. Families are maxing out credit cards just to pay their rent.
This debt-fueled consumer spending binge of the past three years mirrors federal government spending. The national debt has breached $34 trillion, with another $1 trillion being added every 100 days or so. Interest on the debt is now $1 trillion annually, the third-largest budget item behind only the Social Security Administration and the Department of Health and Human Services.
The explosions in government and consumer debt are related. Runaway federal spending prompted the Federal Reserve to create trillions of dollars for the Treasury Department to pay its bills. That drove inflation to 40-year highs, which robbed workers of their purchasing power, prompting them to take on debt to maintain their standard of living.
Ironically, President Biden cited his American Rescue Plan and the infrastructure bill he signed as two critical components of Bidenomics that have aided in his quest to expand high-speed internet access. Of course, these multitrillion-dollar spending packages also supercharged inflation.
From his podium, President Biden predicted that everyone in North Carolina would have high-speed internet access by the end of the decade. Unfortunately, because of the explosion in government spending, the federal debt will exceed $52 trillion by that time.
The never-ending flood of government debt will bring more rounds of inflation and only worsen American families’ financial situations as prices and interest rates fluctuate violently.
Americans’ main concern today is not their internet speed but their inability to afford necessities such as food and housing.
The only way to reverse this cost-of-living crisis is to reverse what got us here: runaway government spending.
