As the economy attempt to get over the slump caused by COVID-19 and the following lockdown-induced recession, quite a few Americans are experiencing slightly larger paychecks. Despite this, the spiking rates of inflation are outrunning the new wage growth, which has led to an erosion of purchasing power for all American households.
As seen in data reported from the Bureau of Labor Statistics this past Wednesday, “real average hourly earnings,” which take into account the real-time effects of inflation, dropped by over 2.4% when comparing December 2020 to December 2021.
“In what was the best year for wage growth that we have seen in many, many years, it still comes up as a loss for many households,” stated Greg McBride, the Bankrate chief financial analyst, to CNBC in an interview. “Their expenses increased even faster and chewed up all of the benefit of whatever pay raise they had seen.”
The group also saw fit to report that consumer prices are climbing at a rapid 7% rate as of December 2021, which is the highest rate seen in over four decades. Despite all of this, Old Uncle Joe is trying to brush off these alarming issues.
“Today’s inflation numbers show a meaningful reduction in headline inflation over last month,” he stated of Twitter. “We are making progress in slowing the rate of price increases. But there is still more work to do — I remain focused on lowering costs for families and maintaining strong economic growth.”
As seen by his poll numbers, however, Americans are not falling for his arguments. As reported by a survey from Fox Business in December, over 47% of Americans think that Biden’s new policies are “hurting” the economy, while a puny 22% think they are helpful to the economy. In the same vein, 46% think that Biden’s social spending agenda would “push inflation higher,” while 21% think it would “help lower inflation.”
Other highlighted topics from the poll include:
- Rising prices over the last six months have caused financial hardship for two-thirds of voters. That climbs to three-quarters among those living in lower-income households.
- By more than two-to-one, people say the president’s economic policies have hurt rather than helped them personally. That’s largely driven by almost two-thirds of Republicans saying they’ve been hurt — nearly five times the number of Democrats who say the same. For comparison, one-third of Democrats said they had been hurt by former President Donald Trump’s economic policies in a December 2018 Fox News survey.
- Just 1 in 6 voters say they are better off financially than they were a year ago, and a majority rates their personal financial situation negatively. That’s a reversal since August, when over half said their finances were in positive shape.
Throughout all of this, One Harvard University economist and a former economic advisor to President Barack Obama, Lawrence Summers, has taken to denouncing the Biden administration’s efforts to minimize and deflect from the reality” of inflation.
“We have a serious inflation problem whatever the precise CPI reading,” he stated in a tweet. “Inflation is running well ahead of anything seen during the guns and butter Vietnam episode and 50 percent above where it was when Pres Nixon imposed wage-price controls.”
“White House cites leading economists as foreseeing sharp declines in inflation over next two years. Certainly could happen,” he concluded. “On other hand same kind of consensus was looking for inflation at well below 3 percent this year and it turned out to be 7.”