The average inflation rate in the United States was 4.1% in 2024, compared to 1.40% in 2020. While the cost of goods and services has increased, the income in American households in one-third of U.S. states is falling. This gap is adversely impacting people’s purchasing power. They cannot do things they should due to exorbitant prices.
Let’s look at 11 such things.
Taking Care of Their Health
The United States has the most expensive healthcare in the world. According to a poll, nearly 50% of adult Americans struggle to afford health care. Due to the high cost, 21% of people still need to fill a prescription, and 21% opt for over-the-counter alternatives. 10% cut pills in half or skipped their medicine doses. Even people with health insurance are either worried about affording premiums or out-of-pocket medical expenses.
Buying a Home
The big American home dream seems out of reach in the current economy. A survey found that 63% of Americans need more affordability to buy a home in 2024. Most potential buyers are waiting for home prices and interest rates to drop.
Another survey revealed that 76% of Americans believe it is a bad time to buy a house, indicating an affordability crisis in the homeownership market.
Renovating the Home
Home renovation projects require a significant financial investment. However, homeowners are looking for ways to cut costs amid rising inflation, high borrowing costs, and sluggish real estate sales market growth. Hence, they are holding off on remodeling their homes, opting for cost-conscious downgrades and DIY remedies.
Pursuing Higher Education
An increasing number of American adults are losing confidence in higher education, and affordability is one reason. A survey highlighted that 28% of Americans find the price of college education and student debt very high.
According to another survey, 31% of enrolled students cite cost as a key consideration for withdrawing from coursework. 56% have not enrolled or reenrolled in college due to the hefty price tag of education.
The average tuition fee of a college ranges from $10,500 to $95,438, depending on whether it is private, public, or highly rated, such as Harvard University.
Owning a Car
A car is necessary for Americans due to the unreliable and poorly connected public transit network. However, many are compelled to ditch car ownership because they can no longer afford it. Americans need to have at least $100,000 annual income to buy a car, but more than 60% of households and 82% of individuals fall below this line.
The average sticker price of a new car in December 2023 was almost 30% higher than in January 2019. The prices of used cars and electric vehicles are unreasonable, too. Then, there are fuel, maintenance, and insurance costs to consider.
Dining Out
Eating out in restaurants, ordering food deliveries, or grabbing takeaways is a big part of American culture. However, rising restaurant costs are making consumers reconsider their eating habits. A restaurant trend watch report states that more U.S. consumers either dine out less, order less, eat home-cooked meals, or trade down to less expensive eateries.
The results of another consumer survey reflected similar trends, with 78% of people admitting that dining out was more challenging than before due to higher menu prices.
Eating Healthy
A national survey reveals that 77% of Americans would like to consume healthy food, but the cost of healthy food (60%) is a significant deterrent. A separate survey found that 50% of Americans actively try to eat healthy, but 46% find it too expensive. The soaring prices of fresh fruits and vegetables and other nourishing food items have strained the grocery budget.
Going to Work After Having Children
This childcare affordability crisis is reducing household income for families and worsening their financial stress. Parents, especially mothers, are compelled to leave the workforce to care for their children. Research shows that 52% of mothers are considering leaving the workforce because they lack adequate childcare support. 33% of mothers are already out of work because they cannot find affordable childcare.
The macro-level impact is also a concern—a study finds that this crisis costs the nation $122 billion annually in revenue, lost earnings, and productivity.
Living in Big Cities
Many Americans are relocating from metro cities to smaller cities with lower median house values to save money. While smaller cities are undoubtedly financially convenient, they can’t compete with big cities’ unmatched professional opportunities, quality education and healthcare access, and well-developed infrastructure.
Traveling
Who doesn’t love to explore the world and embark on adventures? Travel should be an integral part of life as it is fun and opens your mind. Unfortunately, Americans are giving up on their travel aspirations to avoid travel costs, which are pinching their wallets. 37% of Americans are traveling less, and 88% of them blame cost as the reason.
Saving Money
It is common financial sense to save money for emergencies, home ownership, children’s education, and retirement. However, Americans are spending money and feeling pessimistic due to inflation and high rates. They have given up on saving for their goals because they feel out of reach.