Inflation is rampant, and our lifestyles are suffering from the ravages of ever-higher prices for necessary goods and services. Our government touts a falling rate of inflation, but they mislead the public by implying that prices are falling. This is categorically untrue, as a decreasing rate of inflation simply means that prices are rising a bit slower, but rising all the same.
In the manipulative world of statistics, if the inflation rate for 12 months is 4.2%, and the average hourly wage rate goes up during that same period by 4.2%, consumers are keeping up. Everyone knows (from experience) that is false.
Anyone who pays attention knows that the inflation rate as reported is nonsense. Prices of most items rise quicker, and last longer, than reported by government agencies. Incomes generally rise much slower than reported numbers. Average hours worked are trending down, as full-time jobs are being lost by the hundreds of thousands, while part-time jobs are increasing. The new jobs not only provide fewer hours worked, but also pay less on a per-hour basis. Most of them have limited or no company-paid fringe benefits.
Perhaps the most significant item not usually addressed by the bureaucracy is taxation. How much of what we all spend every month is tax-deductible? Very little, for most of us. Deductible contributions to retirement plans, property taxes (subject to the $10,000 annual deduction cap), mortgage interest, and sometimes medical expenses may be itemized and deducted. However, about 80% of Americans claim the Standard Deduction, eliminating Itemized Deductions. Most of our daily expenses are paid from after-tax dollars.
Earned income requires payroll withholding of 7.15% (15.3% for self-employment income), and most Americans pay income taxes of at least 12%. Self-employed people and higher earners are subjected to even higher overall tax rates. Taxes, while necessary, reduce our spending power.
Inflation is driven by excessive government spending. Examining Americans' ability to keep up with actual inflation, there is no hope unless Congress stops spending so much money. That idea, of course, is ludicrous. Every congressional expenditure is (at least partially) meant to buy votes. Spending cuts are viewed as political suicide.
When you hear the Administration use dumb phrases such as “lowering costs for Americans” and “building the economy from the bottom up and the middle out,” it is a smokescreen for over-taxation of working citizens.
Everyone’s approach to getting along in this inflationary environment is different, but in general, the best way to survive is to work longer, harder, and more often, until a policy shift begins to return us to a more normal economic environment. Before it’s too late.
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