Because of the cumulative effect of inflation, US household spending increased by an average of $709 per month
CNN revealed that US household spending is $709 more per month than it was two years ago, due to the cumulative effect of high inflation.
The network said, in its report, that inflation in the United States had a growing impact on family budgets, as the typical American family spent $709 in July more than it spent two years ago to purchase the same goods and services.
The network indicated that this figure confirms the cumulative effect of high inflation on consumer financing even as price growth has slowed significantly in recent months.
“High inflation over the past two years or more has done a lot of economic damage,” said Mark Zandi, chief US economist.
Much of this spending increase is driven by housing costs that have risen, Zandi told CNN, and that families are spending more on groceries than on purchasing, maintaining and insuring vehicles and entertainment services such as cable.
He continued, “Paychecks have also grown over the past two years – but not as much as the cost of living, and inflation-adjusted earnings are stuck in 2019 despite higher prices, but real earnings, which adjust for inflation, are stuck at late-2019 levels.”
“The real gains remain lower than they would have been had it not been for the pandemic and the Russian war, which weighs heavily on the collective psyche,” Zandi said. However, the Federal Reserve is done raising rates.
He added that the typical household spent $202 more in July this year than it did a year ago to buy the same goods and services. That’s significant, but it’s still short of a peak of $536 for that annual metric — a record high dating back to June 2022, when gas prices rose above $5 a gallon for the first time.
The network said: “Consumer prices rose by 3.2% in July compared to the previous year, which is less than expected, and although this was slightly higher than the annual inflation rate in June, most of the impact was driven by the effects of the calendar.”