Inflation is causing hardship during the holidays for nearly half of American households

Thursday’s Gallup poll showed that inflation is taking a financial toll on millions of American families, with low-income families hardest hit.

scanning have found 45 percent of US households reported that recent price increases were causing their families some degree of financial hardship.

Prices have risen at the fastest pace in decades as Americans head to stores and online to make purchases this Christmas season. High home heating fuel prices are also hurting home finances as the nights get colder in most parts of the United States

Ten percent of households say they suffer “extremely” from inflation. Another 35 percent have “moderate” difficulties.

The burden of inflation is shifting towards lower income families. Among families with incomes less than $40, or less than 00, 42 percent say they experience moderate hardship and 28 percent say they experience severe hardship. That’s a total of 71 percent of those who say they suffer from inflation.

Among households with incomes between $40,000 and $99,999, only eight percent reported severe suffering and 38 percent reported moderate suffering. Among high-income families, the large share is only 2% and the moderate share is 28%.

There is some political divide when it comes to inflation. Republicans and independents were equally likely to say they were having a hard time, at 11 percent. Among Democrats, the largest share was eight percent. Moderate suffering was reported by 42 percent of Republicans, 38 percent of moderates, and just 28 percent of Democrats.

In other words, 63 percent of Democrats say they have no trouble at all with inflation, while only 51 percent of Independents and 47 percent of Republicans say so.

Inflation is more than a handicap for families without a college education. 13 percent of non-university families say they experience severe hardship and only 4 percent of college graduate families say so. Forty percent of non-college families say they have experienced moderate hardship, compared to 26 percent of college graduates.

The Gallup poll shows that claims by some left-wing activists and journalists that inflation fears were driven by the wealthy do not reflect the experiences of American households. President Biden himself claimed In July there was no “serious” economist worried about inflation.

Breitbart News mentioned In April, Biden’s inflation would hurt low-income Americans disproportionately.

Low-income Americans of all races also experienced setbacks in the early months of the Biden administration.

The latest data on prices from the Bureau of Labor Statistics shows that prices jumped much higher than expected in March. The 4.2 per cent annual gain is the highest since 2011, although this is a bit of a statistical delusion created by the slump in demand for goods and services after our political leaders ordered everyone to take shelter at home to protect themselves from Covid-19. But even the monthly gain beat expectations, rising 1 percent compared to a forecast of half that.

Inflation particularly severely affects those at the lower end of the income scale. A greater part of the income goes to current consumption, so higher prices squeeze budgets even more. Tiny savings in low-interest bank accounts are more likely to be paid out by stocks or inflation-hedge investments, so they are vulnerable to a decline in the purchasing power of the US dollar.

Compare household spending shares with higher income brackets. The top third of households, measured by income, spend about 8 percent of income on transportation, according to the Pew Charitable Trusts. Statista gives higher numbers for the higher quintile but there is still a good deal under the lower quintile. The same is true of food – it consumes less of the income of the richer family and reduces their monthly expenses.

Moreover, wealthier households are more likely to benefit from the “upside” of inflation because they have more fixed-rate debt that is repaid with dollars consumed in an inflationary environment. By contrast, households with variable debt – such as credit cards – do not benefit because rates tend to rise along with inflation. Likewise, lower-income families are more likely to rent their homes than higher-income families, and rents rise with inflation.

Inflation also tends to be good for stocks in the long run because companies can raise prices, which translates to higher profits and higher stock prices. The top 1 percent of earners own 47.9 percent of their wealth in publicly traded stocks and mutual funds, a much higher share than lower-income Americans. Especially if wage gains skew behind prices and interest rates stay low, higher inflation can be very beneficial for stocks, which is one of the reasons we are seeing new highs in the market.

Inflation, especially rising food and gasoline prices, acts as a regressive tax, which affects low-income families more than high-income families. In fact, higher-income families are more likely to be the net beneficiaries of inflation.

Biden, who won the office on a promise to fight inequality and raise taxes only on wealthy Americans, oversaw raising a hidden inflation tax on low-income families.

Welcome to Biden’s America, where the poor pay more.

The latest Gallup poll confirms that this has happened.

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