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What are the Effects of Inflation on the Average American Household?

by | 2023-11-24 | Business News

Overview of Inflation in the US

In recent years, the United States has experienced rapid inflation, primarily due to disruptions in supply chains following the economic slowdown caused by the COVID-19 pandemic. As a result, supply has struggled to keep up with demand, leading to increased prices for goods. Additionally, a sharp rise in energy prices post-pandemic has increased transportation costs, affecting the prices of various goods. Consequently, inflation in America has accelerated in the post-pandemic period, leading to price increases for many goods and services closely related to daily life.

CPI All Item 2023

2019 vs 22023 American Families Expense: $709 increased

In the United States, the average household’s expenses have increased by $709 per month compared to two years ago. Thus, over the past two years, high inflation has significantly impacted American families.

Let’s look at specific examples. Firstly, in the average American household, spending at grocery stores has increased, and there is also a higher cost burden for purchasing cars and paying for car insurance.

CPI Food Energy Vehicle

While salaries in the United States have increased over the past two years, they have not kept up with the surge in living costs due to high prices. After adjusting for inflation, income levels are almost the same as they were in 2019. Even if there had been no pandemic or war involving Russia, real incomes would still remain below that level.

Wages have begun to outpace inflation, and the Consumer Price Index (CPI) has significantly eased. In July 2023, the CPI rose by 3.2%. By August 2023, a further soft landing of the economy (growth accompanied by moderate inflation) is expected.

CPI vs Income

(Source:statista

Conclusion

Inflation significantly impacts household finances, but with proper planning and action, its effects can be minimized. It’s crucial to stabilize household finances through budget planning, expenditure management, investment, savings, and debt management. At Takezo Accounting Firm, we offer advice on specific financial management to our clients. We provide comprehensive support for improving household finances in the face of inflation. If you’re interested, please don’t hesitate to contact Musoco.

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