The inflation rate is the highest it’s ever been since 2012, which has all but eliminated any additional buying power the working class has gotten since then.
On Thursday, the U.S. Department of Labor reported that the increase in inflation over the most recent 12-month period ending in June was at 2.9 percent. Even though the unemployment rate remains low and the stock market remains strong, when factoring in the astronomical increase in cost of basic daily necessities like food, shelter, and fuel, most Americans haven’t gotten a penny ahead.
According to The Washington Post, average rent across the nation increased by 3.6 percent, food at restaurants and cafeterias went up by 2.8 percent, and gas prices have gone up by 24 percent — all in the last year alone. The rising cost of essential needs combined with wages still lingering at recession levels means that the economic “recovery” really only happened for corporations and the wealthy:
Meanwhile, the rich have never had it so good. A recently published Pew Research study showed that income inequality in the U.S. has been steadily increasing since the 1970s with no signs of slowing down, and is further stratified along racial boundaries. While Hispanics still earned only 74 cents to every dollar earned by whites, Hispanics are now earning even less, making just 65 cents to every dollar made by white Americans. Across all ethnicities, the richest 10 percent of Americans, on average, made 8.7 times more money than the poorest 90 percent.
The Economic Policy Institute (EPI) — a progressive-leaning economic think tank — says the Federal Reserve could raise interest rates as a means of slowing inflation in order to give the working class some breathing room. However, the EPI says the Fed’s current policy of keeping interest rates as low as possible is actually exacerbating the problem of stagnant wages:
Macroeconomic policy (including monetary policy) that prioritized very low rates of inflation over low rates of unemployment is a key reason why real wages have stagnated for the vast majority of American workers in recent decades… Widespread wage growth will not occur over the coming years if the Federal Reserve prematurely slows the recovery in the name of fighting prospective inflation.
Many of the poorest parts of the country in the Midwest and Great Plains regions will suffer even more than most working-class Americans, due to the impact of President Trump’s trade war with China. As Grit Post recently reported, the slow death of family farms and falling incomes in the agriculture industry are prompting many farmers to commit suicide at unprecedented rates.
The 30 Congressional districts most dependent on soybean exports for their economy are all disproportionately impacted by the steep tariffs China imposed on American soybeans in retaliation for Trump’s tariffs on Chinese imports. While all 30 districts went for Trump in 2016, it remains to be seen whether or not Republicans will pay a political price for standing with Trump in light of the tariffs’ impact on farmers.
Jake Shepherd is a freelance writer from Cleveland, Ohio. He enjoys poring through financial disclosure statements, spirited debate, and good scotch. He remains eternally optimistic about the Browns. Email him at jake.d.shepherd.21 (at) hotmail (dot) com.