The Blubber

The typical American household must spend an additional $11,434 annually just to maintain the same standard of living they enjoyed in January of 2021, per CBS.


A recent analysis of government data by Republican members of the U.S. Senate Joint Economic Committee reveals that the typical American household needs to allocate an additional $11,434 annually to uphold the same standard of living they enjoyed in January 2021, just before inflation surged to its highest levels in 40 years.

These figures underscore the ongoing financial strain experienced by many families, even as U.S. inflation rates decline and the economy demonstrates strength by various indicators, including a two-decade low in the jobless rate. The analysis, based on data such as the Consumer Price Index and Consumer Expenditure Survey, delves into the state-by-state impact of inflation.

Despite positive economic indicators, many Americans report not feeling these gains, and recent polls by CBS News indicate that more people are experiencing financial difficulties compared to the pre-pandemic period. Inflation remains a significant factor influencing pessimism about the economy, despite positive aspects such as increased wage gains in recent years.

The Biden administration has criticized the analysis, deeming it "flawed." A White House spokesman countered with federal labor data, noting a 16% rise in per capita disposable income since December 2020, just before President Joe Biden's inauguration.

"14 million more Americans have jobs today than when President Biden took office and household disposable income is up by almost $21,000 since December 2020," the spokesman stated. "And what Congressional Republicans pushing this one-sided study won't admit is that their proposals would raise costs on the middle class and cut Social Security and Medicare so they can give rich special interests more tax giveaways."

Economists attribute high inflation to various pandemic-related factors rather than decisions from any specific political party. Stimulus money injection into the economy, supply-chain disruptions, and labor shortages are cited as contributing factors.

Despite a rapid decline in inflation rates, a Bankrate survey indicates that 60% of working Americans feel their income has not kept pace with inflation over the past 12 months. Average hourly pay for workers has increased by 13.6% since January 2021, trailing behind the 17% increase in inflation during the same period. The main spending categories for consumers to merely break even are food, transportation, housing, and energy, collectively accounting for nearly 80 cents of every additional $1 in spending, according to the Republican analysis.

Gene Ludwig, Chairman of the Ludwig Institute for Shared Economic Prosperity (LISEP), commented on the fragility of middle- and low-income Americans, emphasizing that they are "living on the edge." LISEP's own analysis found that, on average, the income needed to cover basic necessities fell short by almost $14,000 in 2022.

The state with the highest additional expenditures to maintain the same standard of living compared to 2021 is Colorado, where households must spend an extra $15,000 annually, according to the JEC analysis. In contrast, residents in Arkansas face the lowest additional spending to sustain their standard of living, at around $8,500 annually.