Inflation is causing a decline in affordability for average working individuals, with prices on everyday necessities such as groceries, gasoline, and housing rising significantly in the past two years due to government spending and the Fed's money-printing.
The US economy is predicted to enter a recession by spring, leading to a 25% or more crash in the S&P 500, according to economist David Rosenberg, who warns that American consumers are nearing their spending limits and rising home prices reflect a weak housing market.
Consumer spending in the US is expected to decline in early 2024, marking the first quarterly decline since the start of the pandemic, according to a survey by Bloomberg. The pessimism is attributed to high borrowing costs and the depletion of COVID-era savings.
US household wealth reached a record high of $154.3 trillion in Q2 2022, driven by a surge in stock market investments and real estate values, according to Federal Reserve data, providing consumers with a cushion to weather future economic storms and a potential increase in unemployment.
The COVID-19 pandemic and the expiration of pandemic-era programs have led to a rise in child poverty and an increase in the overall poverty rate in the US, while household income has fallen and inflation has soared, according to the US Census Bureau.
Despite increased household wealth in the US, millions of households are struggling financially due to inflation, high interest rates, and rising living costs, which have led to record levels of debt and limited access to credit.
The child poverty rate in 2022 has more than doubled compared to 2021, primarily due to the expiration of pandemic-era programs such as the child tax credit, which provided support for basic necessities and decreased financial hardships for families.
The forecast for next year's Social Security increase has risen to 3.2% from 3% due to a rise in inflation, but the increase is still significantly lower than the 8.7% COLA in 2023, causing concerns for seniors who have struggled to keep pace with inflation and have seen their share of poverty increase.
The lingering effects of the pandemic have led to a 2% decrease in household income in Minnesota, causing poverty rates to rise, with 9.6% of the population now living below the federal poverty threshold.
American workers are facing a decline in median annual household income due to high inflation, with 17 states experiencing a decrease while only five saw an increase, according to data from the Census Bureau. The labor market remains challenging, with wages rising but not enough to keep up with inflation.
The Biden administration's economic policies, known as "Bidenomics," have led to inflation and a decrease in median household income, causing American families to lose ground economically. The media's focus on the poverty rate ignores the negative impact of government welfare programs and inflation on Americans' financial well-being.
The American middle class has been shrinking while the number of people at the bottom and top of the economic spectrum has grown, according to recent studies, with the middle class dropping from 61 percent in 1971 to 50 percent in 2021.
Global wealth experienced a significant decline in 2022, with a 2.7% drop in households' financial assets worldwide, primarily driven by falling asset prices; however, there is optimism for a rebound in 2023 and subsequent years, with projected growth of 6%.
The US economy maintained solid growth in the second quarter, but a government shutdown and an ongoing auto workers strike are clouding the outlook for the rest of 2023.
American household debt has reached record levels in the second quarter of 2023, as Americans have taken on more debt amidst diminishing savings and high interest rates.
The decline in net household financial savings is largely due to the increase in their liabilities, with household financial liabilities rising from 3.8% to 5.8% of GDP in 2022-23, leading to concerns of growing household distress and potential implications for the broader economy.
The share of US adults with decreasing incomes has increased, indicating a cooling labor market, with high- and middle-income households and the West region being most affected, according to a survey by Morning Consult.
The richest Americans are seeing their share of wealth and income increase despite expectations that the pandemic might narrow the wealth gap, with the top 1% holding roughly 26.5% of household net worth and the share of income going to the top 5% growing. On the other hand, the bottom 40% has seen a smaller slice of the pie even as their net worth has risen.
The Social Security Administration is expected to announce a smaller cost-of-living adjustment for retired Americans in 2024, potentially at 3.2%, due to cooling inflation, which is a decline from the 8.7% increase seen in 2023 but still higher than the average increase over the past two decades.
The majority of American consumers are cutting back on both essential and non-essential items in response to inflation, with 92% reducing their spending, particularly on clothing, restaurants and bars, and entertainment outings; however, despite this, household spending in the US has actually increased by 5.5% compared to last year.
