An economist from the University of Pennsylvania’s Wharton School warned that inflation is hitting poor Americans harder than any other demographic.
Analysts from Penn Wharton Budget Model — a project of the University of Pennsylvania’s Wharton School that evaluates public policy proposals — recently found that inflation trends require the typical American household to spend around $3,500 more in 2021 to achieve the same level of consumption as in previous years.
Kent Smetters, who leads the project, told CNBC that wealthy households would need to spend a lower proportion of their income than low-income and middle-income households to maintain their living standards. Meanwhile, persistent supply chain bottlenecks are impacting the phenomenon.
“What they happen to be buying has been hit harder by the supply crunch,” Smetters said of poor households. “It’s broader-based than in the past.”
Chris Wimer, who co-directs Columbia University’s Center on Poverty & Social Policy, noted the same trend to CNBC. “They’re essentially looking to stretch a dollar most days. It’s going to lead to difficult choices between putting gas in the car or paying for your kids’ child care or putting food on the table.”
According to a recent Fox Business survey, 47% of Americans believe that President Joe Biden’s policies are “hurting” the economy, while only 22% believe they are “helping.” Likewise, 46% believe that Biden’s social spending agenda would “push inflation higher,” while 21% believe it would “help lower inflation.”
Other insights from the Fox Business 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.
Despite rampant voter pessimism, President Biden insisted on social media that his economic track record is the “strongest” of any Commander-in-Chief in the past half-century.
“We’re ending 2021 with what one analyst described as the strongest first-year economic track record of any president in the last 50 years,” Biden wrote. “Let’s keep the progress going.”
Biden made a similar argument last week. In a virtual meeting with the “Supply Chain Disruptions Task Force,” Biden discussed the “progress” the economy has made since he assumed office. “Today, America is the only leading economy in the world where household incomes and the economy as a whole are stronger than they were before the pandemic, even accounting for price increases.”