Cumulative Unaffordability 12-9-25

Cumulative inflation since 2021, especially in housing, food, and healthcare, has severely hit lower-income US families, outpacing wage growth and making essential costs unaffordable, with many struggling to cover basics despite some wage gains, creating a deepening affordability crisis where basic needs consume a larger budget share.  

Key Impacts on Lower-Income Households:

Housing Crisis: Rents and home prices surged significantly (e.g., 25% jump in home prices by Q4 2021), consuming a larger portion of budgets and making rentals inaccessible for many, notes Pew Research Center and The Foundation for Research on Equal Opportunity.

Food & Essentials: Grocery costs rose sharply (around 32% since 2019), impacting nearly half of Americans who found food harder to afford, notes the Urban Institute and CBS News.

Disproportionate Stress: Lower-income households (e.g., $25k-$35k income) experienced significantly higher stress from inflation than higher earners, despite tight labor markets and wage growth, reports the Federal Reserve Bank of Dallas.

Lagging Wages: Wage growth often failed to keep pace with soaring costs for rent and other necessities during the peak inflation period (mid-2021 to late 2023), reducing real purchasing power for renters, according to the JPMorgan Chase Institute. 

Key Drivers of the Crisis:

Sector-Specific Inflation: Price increases in housing, food, healthcare, childcare, and energy have driven the affordability issue.

Supply & Demand Imbalances: Severe shortages in affordable rental units persist, exacerbating the crisis for low-income families, notes the Brookings Institution. 

In essence, while overall inflation rates might have eased, the cumulative price increases since 2021, particularly in critical areas, have created a persistent affordability squeeze for low-income Americans, notes Yahoo Finance and the Urban Institute. 

Cumulative inflation since 2021 has severely impacted the affordability for lower-income families in the U.S., who face a disproportionate burden due to necessities like housing, food, and energy comprising a larger share of their budgets. While wages for lower-income workers initially grew, sustained high prices have eroded their purchasing power, forcing many to rely on debt or cut back on essentials. 

Key Impacts on Affordability for Lower-Income Families

Higher Relative Inflation: Low-income households experienced higher effective inflation rates than higher-income households because the prices of essential goods (food, housing, energy) rose faster than those of non-essential items.

Housing Crisis: Housing is a primary driver of the affordability crisis. Rents have risen substantially, with a significant shortage of affordable units available for extremely low-income households. Renters, who are disproportionately lower-income, Black, or Hispanic, are often severely cost-burdened, spending more than 50% of their income on rent.

Stagnant Real Wages: While low-income wage growth was robust in 2021, real (inflation-adjusted) wage growth has since weakened, falling below the rate for higher earners in some periods. This gap means many families have made little to no financial progress despite working hard.

Increased Stress and Debt: The financial strain is significant, with a large majority of lower-income respondents in surveys reporting high levels of stress due to price increases. Many have depleted pandemic savings and increased credit card debt to cover basic expenses.

Cuts in Spending: Families are forced to make difficult choices, such as cutting back on non-essential purchases, social travel, or even utilities like air conditioning, to manage their budgets. 

Overall, cumulative inflation has made it extremely difficult for lower-income families to cover their true cost of living, which has risen much faster than average household earnings since 2017. 

I can provide a side-by-side comparison of the rising costs for specific necessities like child care, healthcare, and groceries versus wage growth in your specific location if you provide a major city or state. Should we start there?

https://www.google.com/search?q=us+affordability+for+lower+income+families+due+to+cumulative+inflation+from+2021

Norb Leahy, Dunwoody GA Tea Party Leader