Rising Cost of Living Strains American Households

Recent analysis of government data reveals that the average American household now requires an extra $11,434 annually to uphold the same standard of living as in January 2021, before a substantial inflation surge. This financial pressure persists despite a receding inflation rate and a robust economy with a historically low jobless rate. The public is expressing pessimism about the economy, citing the substantial increase in spending necessary to maintain their quality of life. While average hourly wages have risen by 13.6% since January 2021, they have failed to match the 17% inflation increase during the same period. The main categories driving the heightened spending include food, transportation, housing, and energy, accounting for almost 80 cents of every additional dollar spent. The Ludwig Institute for Shared Economic Prosperity found that the average income needed to cover essential expenses fell short by almost $14,000 in 2022. Colorado stands out as the state with the highest additional expenditures to afford the same standard of living, while Arkansas requires the least. Notably, lower-income households bear the brunt of inflation due to their higher spending share on basics. Although inflation is decelerating, prices are not declining across the board, contributing to ongoing financial strain for consumers. Aimee Picchi, Associate Managing Editor for CBS MoneyWatch, is the author of this piece.