The Current Cost of Living in the US The cost of living in the United States has been a pressing issue for many Americans, especially in light of recent economic fluctuations, inflation, and evolving job markets. With an upcoming Presidential election involving two major candidates with very different views, the US economy is the foremost issue to American voters. Understanding the current situation, the general outlook, and identifying practical strategies for navigating and overcoming these challenges can help individuals and families make informed decisions.
Let's delve into the up-to-the-minute insights on the cost of living, offer a outlook for the future, and discuss strategies to conquer financial difficulties.
The cost of living varies significantly across the U.S., influenced by such factors as geography, housing and job markets, and local economics. Historically, major urban centers such as New York, San Francisco, Boston, and Los Angeles, rank among the most expensive places to live. As remote work, largely sparked by the Covid crisis, continues to trend, increased attention to supporting local businesses, and as online businesses flourish, there is increased demand in what have previously been more affordable regions.
It's important to note that when we speak of "the cost of living", we refer to the amount you can expect to spend for the day-to-day necessities and still maintain a reasonably comfortable lifestyle. Just as expenses in a particular area of the country vary, so do salaries based largely on industry, demand for qualified individuals with specific skills, and local factors such as transportation and housing costs. It is often helpful, when considering salaries, to consider the total compensation package, including insurance coverages, possible housing credit or assistance, retirement programs or profit-sharing, and the value of other benefits.
Someone earning $50,000/Yr may have no problems meeting day-to-day expenses with enough money left in their pocket ("disposable income") to live very comfortably. The same person with the same salary would struggle just to get by in another area of the country. For example: You may triple your current income by going to Alaska, but what will you spend to stay warm?
To show you how geography effects the cost of living, the folks at Forbes Advisor created this chart you may find interesting:
Some of the key factors effecting the cost of living include: Housing Home prices and rental rates have surged in many markets driven by low inventory and high demand. Even areas previously considered affordable have had significant price increases. According to Redfin, as of August 2024, home prices were up 3.2% since last year. Although Rents have increased about 19% since 2019, they have only increased by about 1% this year. [Washington Post analysis of rental data from CoStar] With many home construction projects being completed and new homes coming on the market, the cool-down in rental costs may continue. On the other side of the coin, because purchasing a home is out of reach for many, there is an increased demand for rental units. President Biden has proposed capping rent increases at 5% annually and to make housing more affordable generally. Former President Trump has suggested cutting regulations will help reduce the housing problem. Vice President Harris is asking for 3 million new housing units, has proposed tax incentives for "starter homes", and $25,000 in down-payment assistance
Utilities
According to US Bureau of Labor Statistics, utility costs have gone up 3% in the past year. (29% in the last 10 years.) Prices are impacted in part, by fuel costs, government regulation, climate change, and increased "electrification", increasing demand. Geopolitical factors also play a big role.
Transportation Again, geopolitical factors continue to effect fuel prices, which not only affect what you pay to put gas in your car, but also all methods of shipping and travel depending on those fuel prices. In addition, unusually severe weather in fuel-producing areas of the country and on-going wars play a role. The US Energy Information Administration reports that as of 23 August of this year, the price of gas has continued to fall in most parts of the U.S, and is now averaging $3.39/Gal. Groceries and consumer goods Weather and fuel costs play a role here as well, but overall, there is good news. The U.S. Dept of Agriculture reports that food prices will only increase about 1% (considerably lower than they expected) and next year, they are looking at about 0.7%. As of June of this year, seafood, dairy, fruit and vegetables have continued to drop. Beef and veal rose 0.5%. Egg prices are down 0.8%.
Healthcare One third of Americans do not have a Primary Care Physician. 80% of physicians say they are overextended. Healthcare costs are expected to grow about 5% to 4.9 trillion Dollars. Fortunately, several healthcare reforms have been passed and several more are in the works. For example, the Inflation Reduction Act of 2022 capped the patient price of insulin at $35/Mo in the Medicare program. Work is underway to extend this and several similar cost reductions to everyone. Private insurance premiums and patient co-payments continue to rise, seemingly with no end in sight.
There is some Hope: Outlook for the Future
Although the outlook for the cost of living in the U.S. remains somewhat mixed, the Federal Reserve recently slashed interest rates for the first time since 2020, by 1/2 %, which is a big deal and indicates inflation has slowed significantly. This will make it easier to finance a car, start a business, or handle the balance on your credit card(s). Another cut (probably another 1/2 %) is expected this year and a full percentage cut (1%) is expected next year! Very welcome news! Fed chairman Jerome Powell said to reporters "The American Economy is in good shape." The change is slow but heading in the right direction. Personally, I'm hopeful. Unemployment rates dropped as of today, and a lot of companies are still hiring. This indicates that the administration's work to improve our cost of living is working as planned. There is a labor strike (currently "paused" by the unions) at shipping ports, mostly in the eastern U.S., and the gulf. A short duration strike (2-3 weeks) will cause disruption in the supply chain, leading to sporadic shortages of some household products. Because they are perishable, fruit (particularly bananas), vegetables, and some medicines will be the first casualties. A longer duration strike will likely drive other prices up a little. Because of the effects this strike can have on the recent progress make to the US economy, don't be too surprised if the Federal government intervenes in an attempt to end the strike. The Federal Reserve will watch this closely and may delay another interest rate cut, but I believe more are coming.
While the present may appear overshadowed by financial uncertainty, the future holds the promise of positive change. Economic conditions are fluid, and patterns of growth and transformation are constantly emerging. By maintaining a forward-looking perspective and embracing resilience, you position yourself to adapt to the shifting tides of the financial landscape.
Debt Solutions
Debt can seem overwhelming. Consider exploring debt consolidation, negotiating with creditors, or seeking professional assistance to develop a structured repayment plan. By addressing your debts proactively, you pave the way for a more secure financial future.
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Budgeting and Savings
Crafting a detailed budget and prioritizing savings are foundational steps in building financial resilience. There are a number of free and inexpensive budgeting Apps online. Sometimes it's easier to budget when you actually see and track your finances. I suggest checking them out and picking the one that you are most comfortable with using. Here is a great list compiled by fellow blogger, Jim Wang:
Even if it's only a couple bucks a week, try to put something into a high-yield savings account*. It's exciting to see it grow! Identify areas where expenses can be reduced, explore opportunities for additional income streams, [ See my article on 5 easy ways to make money from home ], and cultivate a habit of saving for future needs. Small changes in your financial habits can yield significant long-term benefits.
One great opportunity to start saving is with a partnership of over 70 banks and credit unions, offering high-yield savings accounts, managed with a single log-in. You can even earn by referring your friends! Trustpilot rated 4.5 stars, ZERO FEES - Yup! FREE! Easy to start. It's called:
(Come-on, click on the logo and start saving now!)
Financial Education and Empowerment
Knowledge is a powerful tool in your journey towards financial stability. Invest in your financial literacy by seeking out educational resources, attending workshops, or consulting with financial advisors. Empower yourself with the skills and insights needed to make informed decisions and take control of your financial destiny. There are a ton of free financial courses and advisors available online. The National Foundation for Credit Counseling offers some good resources. In addition, if you have a bank account or retirement plan those organizations usually have FREE advisors available. A local social service agency may also be able to help you find a certified advisor or free course(s). NOTE: I am NOT a certified Financial Advisor, and the opinions expressed here (other than links to professionals and facts obtained through my own research) are my own.
Other cost-cutting tips
You already know that store brands are generally less expensive, but don't forget to use coupons! There are a bunch of coupon websites in addition to neighborhood sales papers. It can take a little work but gets to be fun as you get better at it. Make it a game! Consider if warehouse stores such as BJ's or Sam's Club would be worth the investment for your family. Buying in bulk is sometimes handy for larger families but is sometimes NOT less expensive! Consider if you are saving money on a particular item or just buying more at the same price as your local grocer. Will your savings pay for the annual membership fee? If you are able, transfer credit card balances to another card offering an interest-free welcome period and pay it off (or as much as possible) before the welcome period expires. Loyalty clubs (for example: buy 6 bagels and earn a free one) can seem trivial but having enough of them for stuff you buy anyway, can be great. If you have to spend on day-to-day essentials, why not join
and get some of your cash back?!? It's free to join. It does take a little time to accumulate, but I've received $100 checks from them for buying what I normally buy anyway! [NOTE: If you join, please let them know Braindrops.blog referred you to them - I get a referral fee. - Thank you.] Car-pooling or public transportation might be worth considering. Need some exercise in good weather, how 'bout riding a bike or walking (if your Dr. agrees)? Roommates or friends/relatives might be in the same situation, and both of you might benefit from sharing housing costs. Gardening, whether a large backyard garden or small patio garden, can be a fun way to supplement with fresh veggies or fruit. (BTW - Food stamp/assistance such as SNAP programs can usually be used to buy seeds or food-producing plants.) Reduce energy usage whenever possible. Even if a landlord covers that expense in your rent, excessive energy costs will eventually affect your rent ...and conservation is good for the earth!
Embracing the Unknown with Confidence
As you navigate the uncharted waters of the current cost of living in the US, remember that every challenge presents an opportunity for growth and transformation. By embracing uncertainty with confidence and resilience, you set the stage for a brighter financial future. Together, let's conquer the unknown and master the art of overcoming financial difficulties with courage and determination. Financial difficulties are stressful for everyone. If you are struggling or feeling overwhelmed, PLEASE don't hesitate to reach-out for help. Mental health is health like any other and there are many sources of support in your neighborhood (hospitals, clinics, social service agencies, churches, synagogues, temples, or just dial "211" from any phone in the U.S.) Bills are temporary and things DO get better.
In conclusion, the road to financial stability may be strewn with obstacles, but with perseverance, strategic planning, and a positive mindset, you can navigate the complexities of the cost of living in the US and emerge stronger than ever before.
Your financial well-being is within reach. Stay informed, stay empowered, and forge ahead with confidence on your journey towards financial success.
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