The US real economy, far from recovery
Alarm bells are ringing about the situation not only in New York, but throughout the United States: a crisis that exploded with the pandemic and has now been accentuated by inflation, spreading severe hardship for millions of citizens.
While there is talk that the economy is improving, the stock market is rising and unemployment is falling, that does not affect the people on the margins of the system. For many people the economy is not improving. There is some disconnect from that message from politicians with a reality that is hardening especially for lower income people and minorities but also for what are called the working poor and even middle class people.
Nearly 1.5 million New Yorkers are currently facing what is called food insecurity, the lack of guarantees of being able to access food. That includes more than 462,000 children, 46% more than before the pandemic. There are also those who have had to make adjustments to their household budgets and access emergency food. And the number of children whose food comes from food pantries is now 55% higher than before the outbreak of COVID-19.
The problem in the U.S. is not just hunger: the poverty level for families with children is at the highest level on record since December 2020, according to data from Columbia University’s Center on Poverty and Social Policy. And as federal assistance programs that were bolstered by the $1.9 trillion bailout and aid package approved in March 2021 have been reduced or exhausted, inflation has been soaring, reaching 8.5% year-over-year in July.
Prices are rising for everything. In the case of food, that increase has been 10.3% in one year, the largest increase since 1981. Bills at the gas station or for services are getting higher. In a census survey last month, two out of five respondents confessed that they had had difficulty paying for a regular expense in the week prior to the survey, more than during the pandemic.
Those difficulties have other numbers. One in six U.S. households, for example, is behind in paying their household electric bills, an indebtedness that now stands at $22 billion, twice as high as before the pandemic and the worst on record. The average amount owed has also doubled.
Meanwhile, wages, adjusted for inflation, have fallen during Joe Biden’s presidency. And while the Federal Reserve is taking steps to try to contain inflationary trends, its actions have already begun to have a negative impact on the most vulnerable in the labor market.
In addition, indebtedness is skyrocketing. Some 30% of Americans are using loans or credit cards to meet normal household expenses and the amount owed has increased in the second quarter of the year by $46 billion, the largest increase in 20 years.
Along with these problems, the point that possibly best illustrates the perfect storm of crisis in the US is the affordability of housing, which is at its lowest point since 1989. In the case of rents, prices are rising at the fastest pace in three decades, a burden for the 36% of Americans who do not own and rent, who are mostly young and minority and in 54% of cases earn on average $42,500 a year, almost 40% less than the national average.
In May for the first time also the national median rent price exceeded $2,000 per month, 15% more than in 2021. In Manhattan the median price on new leases rose last month to $4,150, up 29% from 2021. And it’s not just the latest nightmare in a neighborhood and city of exorbitant prices, but is repeated in many other metropolitan areas, especially those that received inflows of new residents in the pandemic, where rent inflation far exceeds general inflation: 21% in Phoenix and 14% in Miami, for example.
According to a 2020 government study, every $100 average rent increase is associated with a 9% increase in homelessness. And these days shelters across the country report an increase in the number of people seeking their services. Waiting lists have doubled and even tripled in recent months.
According to census data in June, 13.7 million people were behind on their rent or mortgage payments, and 40 percent of them were likely to be evicted or foreclosed on in the next two months.