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Since President Joe Biden took office, Americans have lost, on average, about $4,200 in annual income due to inflation and rising interest rates, according to a recent study.
Consumer prices have risen 12.7% since 2021, according to a Heritage Foundation study, significantly faster than wages. This translates into an average loss of $3,000 in purchasing power for the American worker.
NEW REPORT: Working Americans are $4,200 poorer today than when Biden took office https://t.co/4xn2OTYzJU
— Heritage Foundation (@Heritage) September 23, 2022
On the other hand, the Federal Reserve has implemented a tighter monetary policy in an attempt to reduce inflation, inevitably causing interest rates to rise. This has had a detrimental effect on borrowing costs on mortgages, car loans, and credit cards.
The study determined that rising interest rates have hurt Americans’ purchasing power by an average of $1,200 annually.
Biden reverses Trump administration’s policies
EJ Antoni, a research fellow in regional economics at The Heritage Foundation’s Center for Data Analysis, called the loss of purchasing power a “catastrophe for American families,” and said it is a result of the economic policies of the Biden administration and congressional Democrats, who are “addicted to spending” public money.
“Washington recklessly spent trillions of dollars it did not have and paid for it with newly printed money, causing rampant inflation that has destroyed people’s purchasing power and jeopardized Americans’ financial futures,” Antoni said in a statement.
The economist explained that, although the Biden administration and the Democratic-majority Congress could have corrected the course of inflation last year, they continued to spend money while the Federal Reserve allowed them to print it.
At a time when Americans are turning to credit en masse to afford their daily expenses, the Federal Reserve began fighting inflation by raising financing costs. As Antoni explained, mortgage interest rates have doubled since Biden took office, significantly increasing monthly payments.
“We are in vicious spiral, but it’s one of Joe Biden, the Democrat-controlled Congress, and the Fed’s own making,” Antoni added.
According to Heritage Foundation data, real annual earnings for the average American worker increased by $4,000 during Donald Trump’s administration, but Biden’s policies completely reversed that trend in a year and a half in office.
Tomás Lugo, journalist and writer. Born in Venezuela and graduated in Social Communication. Has written for international media outlets. Currently living in Colombia // Tomás Lugo, periodista y articulista. Nacido en Venezuela y graduado en Comunicación Social. Ha escrito para medios internacionales. Actualmente reside en Colombia.