American households are facing a bigger challenge in 2022. The spate of high prices for everything from gasoline to medical costs is threatening to put a lot of American families in the red. Unfortunately, experts see things going from bad to worse before they become better.
As Prices Continue to Rise, American Households Don’t See Any Relief in Sight
American households are now witnessing firsthand how inflation is destroying their budget. Right now, household income can’t keep up with rising costs.
In fact, median income fell 3% over the past two years. However, the cost of living went up more than double at 7%.
The rise in prices was led by hefty increases in housing and medical costs. As a result, many Americans are now paying more from their pockets while getting less in terms of goods and services.
In fact, more than 33% of American households surveyed said that their financial situation worsened over the past year.
At Least The Last Two Years Featured Pandemic Relief
From March 2020 until last year, around 78% of Americans received some sort of pandemic relief from the government.
According to a NerdWallet poll of more than 2,000 adult Americans, the money went to savings, but necessities, or to pay the debt. The last two years saw American households pay off a record $83 billion in credit card debt.
Fast forward to 2022, and many Americans are now again reporting rising credit card balances. They are also reporting increased amounts of mortgage, auto, and student loan debts.
Sara Rathner, NerdWallet’s credit card expert, says it’s happening again. “The past year and a half was already tough for the millions of Americans who lost jobs.
Now, we’re faced with rising costs for much-needed items — food, housing, gas, transportation, and medical care. It remains difficult for many to catch up,” she said.
American Household Debt Now At $15 Trillion
Presently, the average American household debt is $155,622. This amounts to $15 trillion in total household debt for the US. The debt covers purchases for credit cards.
It also includes mortgages, home equity lines of credit, auto loans, student loans, and other household obligations. The total is up 6.2% compared to a year ago.
Even as federal relief via stimulus checks and enhanced unemployment benefits dried up, many expect wage increases in 2022. The Conference Board is expecting an increase of 3.9% in wage costs for companies.
This includes adjusted rates for new hires. If this happens, it will be the highest rate for a wage increase since 2008.
No More Federal Benefits on the Horizon
At present, Congress is not in a mood to support any bills suggesting a new round of federal relief programs. As a result, workers will need to wait for their wage increases in order to help balance their household budgets.
For Americans in need of assistance, there remains the Supplemental Nutrition Assistance Program. Tenants who fell on hard times and need help for rental assistance can still apply for relief.
In an earlier announcement, the government also said that federal student loan borrowers remain off the hook for paying their monthly dues until May.
After that, however, they’ll need to resume their regular payments unless another extension gets approval.
Watch the CNBC video report asking the big question: “Can The Inflation Crisis In The US Be Stopped?”
Did your household expenses increase in the last few months? Do you find yourself paying more for less?
Tell us what you think about the rising cost of living in America these days. Share your comments below.