Fact check: How is Inflation Really Affecting U.S. Families?
Inflation has been impacting families across the country more than ever as the national economy continues to recover from the devastating effects of the pandemic.
Have you noticed the cost of food going up?
A large coffee costs $6.75.
Rent is anywhere from $2,000-$4,000 for a small living space.
The minimum wage is rising, but so are the prices of everything else…including housing, food, bills, and medical care.
Let’s dig into how inflation is really affecting U.S. families, and the consequences we can expect to see as 2022 continues.
What is inflation?
Inflation is when the value of money declines, requiring higher costs to pay for minimum goods and services. When the price of goods goes up, the money that people have goes less far thus the value of money decreases. Many think that raising the minimum wage is the answer to this problem, however, it would perpetuate the vicious cycle of inflation. This has been proven time and again with the multiple raises in California, and how much poverty still exists.
What has caused inflation in the U.S.?
There are several factors that have contributed to the rising costs in the U.S. The first is government relief funds.
In 2020, The Biden Administration provided low-income families who were impacted by the devastating effects of the Coronavirus Pandemic an estimated $4.5 trillion of financial relief.
Though the government aid allowed families who lost jobs to the economic downturns faced by the US throughout the pandemic, data now suggests that government stimulus has contributed to a 3% increase.
A less political factor in increasing U.S. rates is the rising cost of the production of goods, prompted by an ever-rising minimum wage. It’s also been worsened coronavirus travel restrictions and supply chain bottlenecks, causing production costs in the U.S. to skyrocket.
How is rising costs really affecting U.S. families?
The effects of inflation are seen across the board. From real estate to the cost of everyday goods, lower, middle-class families across the U.S. are starting to feel the pinch.
The first way that inflation is being felt is the rising cost of gas.
Gas prices have shot up since February 2022, when Russia first invaded Ukraine — and have only gotten worse since the government announced trade sanctions. This includes the banning of crude oil.
In some parts of the U.S., including the San Francisco Bay Area, gas prices are reported $7.25 a gallon. This is close to the living wage, making it difficult for many to justify going to work when they would make more on unemployment.
Inflation is also starting to impact volatile markets like real estate. Real estate typically does well in times of rising inflation because house prices go up…but now there are concerns of the bubble bursting later in 2022.
Though homeowners were generally less affected by the economic fallout of the pandemic than renters, the real estate market is not immune to the effects of inflation — especially not with national house prices jumping to 16 percent.
Who struggles with inflation the most?
Large families are arguably feeling inflation the most because their money is spreading thinly as they’re trying to compete with the rising costs of everyday goods — many while maintaining their same jobs and roles, or taking on second and third positions. Higher grocery bills are compounded by the fact that energy costs have seen a 9% increase in some places, causing the overall cost of living to spike.