Affordability isn’t a hoax, also not a crisis for most

WHEN SOMEONE TELLS you that they are struggling, it is generally a good rule of thumb to take them seriously.

- ALLISON SCHRAGER

So it was not the best political move for President Donald Trump to call the affordability issue a “hoax”. Too many Americans are trying to cope with rising food prices and high costs for housing, health care, and child care.At the same time, it is important to note that there is not a widespread “affordability crisis” in the US. Some people are truly unable to keep up with basic necessities. Some have high expectations that their incomes can’t meet. And some are doing fine.

Affordability has been an issue for years, but it became an acute problem when inflation spiked after the pandemic and there was a drop in real income. Inflation is still high, about 3%, But real income growth is still positive for most Americans, suggesting income is rising to cover many goods and services that are increasing in price.

There are caveats. For the bottom quartile, real wages are not rising as fast as for the other two. And even for the middle class, real wages haven’t risen enough to keep pace with the increase in some critical goods and services.