U.S. Households Continue to Struggle under Nagging Inflation, Sky-High Interest Rates

Financial reports continue to indicate that in the three and a half years that have elapsed since the Biden-Harris administration came into office, the percentage of American households that have become financially insecure has grown. Experts say that the administration’s economic policies have contributed to the increase in poverty, particularly by exacerbating inflation through massive federal spending increases, which in turn caused interest rates to spike.

Following a sharp increase in federal spending as part of an emergency COVID relief package that former President Donald Trump signed in December 2020, the Biden-Harris administration and congressional Democrats continued the same level of spending in 2021 and 2022 instead of letting the emergency spending expire, spending $5.9 trillion more than what was spent in pre-pandemic 2019. As pointed out by economic expert J.T. Young, this “excessive spending has helped over-weight demand relative to the supply of goods — too much money chasing too few goods,” causing prices to rise.

When Biden took office in January 2021, inflation was at 1.4%. By March, it had risen to 2.6%, and by January 2022, it ballooned to 7.5%. Six months later, it peaked at 9.1%, a 40-year high. But by December 2022, the rate was still at 6.5%. Currently, the rate is at 3%, which Young noted is still well above the Federal Reserve’s acceptable target rate of 2%.

As Young went on to observe, this was “only half of Americans’ pricing squeeze. The other half comes from the huge jump in interest rates that the Federal Reserve had to implement to cool Biden’s spending-infused inflation inferno. Eleven times the Fed was forced to hike rates, taking them from 0.25-0.50 percent in March 2022 to 5.25-5.50 percent in July 2023,” where it remains currently.

“So, Americans are trapped between inflation’s twin pressures: The prices they pay and the money they borrow,” Young added. 

According to data that has recently come to light, the economic situation is continuing to have enormous financial consequences for vast swaths of U.S. households. As reported Wednesday by The Epoch Times, a nonprofit that tracks household budgets called United For ALICE (UFA) has estimated that, according to its most recent available data from 2022, 42% of American households are facing an impossible choice every month: “Pay the rent or put food on the table.”

While the data for 2023 and 2024 has yet been published, recent trends indicate that the struggles have only continued. A Forbes Advisor survey from last year found that 40% of respondents reported living paycheck to paycheck, with 29% saying they could not cover standard expenses. In July of this year, financial services provider LendingTree reported that since 2022, financially insecure households have grown from 34.1% to 36.4%.

“It shouldn’t be terribly surprising,” remarked Matt Schultz, LendingTree’s chief credit analyst. “The perfect storm of record debt, sky-high interest rates, and stubborn inflation have resulted in many Americans’ financial margin of error shrinking to virtually zero.”

Another factor that is hampering millions of households is stagnant growth in wages. Kristen Rotz, president and CEO of United Way of Pennsylvania, told The Epoch Times that 2023 and 2024 have seen virtually no change. “Inflation is slowing, but wages, though increasing somewhat, are still lagging. The cost of the basics outpaced wage growth.”

As a result, food banks from Brooklyn, N.Y. to Michigan are experiencing record demand. A Port Huron, Michigan food bank told the Epoch Times that it recently served a record 38 families in one day. “Groceries are so expensive,” a volunteer observed, stating that the average value of a food pick-up per family is $150. “That amount does not even cover their whole weekly grocery bill. We supplement their food budget so they can pay the rent or car expenses. It’s inflation and the economy that is driving people to us.”

In Brooklyn, about 2,500 people come to the Council of Peoples Organization every week for food, a vast increase from the few dozen that came weekly before the pandemic. According to Chief Executive Officer Mohammad Razvi, many of those coming for the food aid cite sky-high housing costs as a primary reason for not being able to afford groceries. Since the pandemic, home prices have soared 54%.

Republican lawmakers are contending that the financial struggles millions of American households have been experiencing under the Biden-Harris administration are unlikely to change if Vice President Kamala Harris is elected president.

“Every day, the American Dream moves further out of reach, and hardworking Americans are feeling the consequences of the Harris Price Hikes everywhere — from the grocery store, to paying rent, to filling up their cars to get to work,” stated Senator Rick Scott (R-Fla.) last week.

House Ways and Means Committee Chair Jason Smith (R-Mo.) expressed similar sentiments. “One thing Democrats cannot change is the Biden-Harris economic record: 20 percent rise in prices and skyrocketing interest rates preventing families from buying a home and small businesses from growing. Whether it was supporting the trillions of dollars in Democrat spending that overheated the economy or endorsing the absurd claim that inflation was transitory, Kamala Harris has been in lockstep with every one of Joe Biden’s radical economic policies.”