Americans have lost an average of $4,200 in annual income since President Joe Biden took office, erasing the $4,000 increase in yearly earnings achieved under the Trump administration, an analysis by the Heritage Foundation has revealed.
With consumer prices soaring 12.7% since January 2021, outpacing wages, which rose just 8% over the same period, the average American has lost about $3,000 in annual purchasing power, the think tank stated.
Higher interest rates by the US Federal Reserve, the central bank of the United States, coupled with growing borrowing costs have also reduced the average US resident’s purchasing power by another $1,200, according to the report, released on September 22.
This has left millions of Americans struggling to pay for daily necessities such as food, gas, and rent.
A ‘Vicious Spiral’
“Simply put, working Americans are $4,200 poorer today than when Biden took office. This financial catastrophe for American families is the direct result of a president and Congress addicted to spending our money, combined with a Federal Reserve compliantly enabling this addiction by printing more dollars,” said EJ Antoni, a research fellow in regional economics with the Heritage Foundation’s Center for Data Analysis.
Americans have now found themselves locked in a “vicious spiral,” with many taking on additional debt to tackle the growing cost of living, the research fellow for regional economics said.
Weighing in on the Federal Reserve raising interest rates for a third straight time on September 21, EJ Antoni added:
“Now, the Fed is finally fighting inflation, which is pushing up interest rates and increasing financing costs. Rates on all kinds of consumer debt are rising. Mortgage interest rates have doubled since Biden took office, greatly increasing Americans’ monthly payments.”
The United States central bank on Wednesday announced another sharp increase in interest rates in its attempt to battle high inflation. The increase by 75 basis points raised the benchmark federal funds rate target to between 3% and 3.25%, the highest it has been in nearly 15 years.
It also signaled even more aggressive hikes ahead, as annualized inflation in August was 8.3%, more than four times the Fed's target rate of 2%.
“We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t… Higher interest rates, slower growth and a softening labor market are all painful for the public that we serve. But they’re not as painful as failing to restore price stability and having to come back and do it down the road again,” Powell said at a press conference on Wednesday.
The Heritage Foundation think tank underscored that under the Donald Trump administration, the average American’s annual earnings had increased by $4,000.
The Democratic POTUS downplayed the grim data, suggesting that an improvement in gas prices was a sign that inflation has started to moderate.
“Today’s data show more progress in bringing global inflation down in the US economy. Overall, prices have been essentially flat in our country these last two months: that is welcome news for American families, with more work still to do,” Biden said in a statement on September 13.
As for the Fed’s efforts to curb inflation, he told a CBS News host last week:
“We hope we can have what they [call] a soft landing — a transition to a place where we don’t lose the gains that I ran to make in the first place for middle-class folks.”
Ahead of the November midterm elections, former President Donald Trump took aim at soaring inflation under the Biden administration during a Save America rally. He also warned that the situation would get “a lot worse.”
“Under the Trump administration, we had the greatest economy in the history of the world with no inflation. Biden and the Democrat Congress created the worst inflation in 50 years and that’s going to get a lot worse because right after the election when they stopped pumping the oil out of that beautiful strategic reserve that we had, millions and millions of barrels we pumped in, and now they’re pumping it out so that we can keep the prices down a little bit,” Trump said.
The 45th POTUS spoke in Youngstown, Ohio, as he turned out to support Republican Senate candidate J.D. Vance, running for office in the November midterm elections.
Tackling inflation before the November 8, 2022 midterm elections has been one of the major priorities for Biden.
All 435 seats in the House of Representatives are on the ballot, while 35 Senate seats are also up for grabs. Democrats currently have narrow majorities in both chambers of Congress.
Numerous polls have predicted that the Republicans may take control of the House, with the Senate reportedly too close to call.