AFFORDABILITY – AFFORDABILITY. This seems to be a popular phrase now a days
with midterm elections being 9 months away. Unfortunately, most politicians from either
political party have no clue that they will not be able to lower prices at your local grocery
store. But they believe they can change your perception that their party can save the
hard-working American worker from going hungry and paying $300 a week or more at
the grocery store for an average family. Well, here’s a news flash. That’s not going to
happen! At least not during the 2-year term of a U.S. Congressperson.
With the latest economic data figures show rapid recovery over the last 3 years. You
would think this wouldn’t be a major issue at the ballot box. The GDP has been
increasing, Inflation around 2.4% (9.1% in 2022), and the unemployment rate is
dropping. So why are we still feeling the everyday pressures of supporting our families.
There are far too many of us who live paycheck-to-paycheck and feel as though we can
never catch up.
Let’s talk about how we got here. And what solutions, if any, can be found to help. Let’s
start with the #1 cause of why we are at this point. The COVID-19 global pandemic has
caused significant U.S. economic and social disruption, which we are still slowly digging
our way out of. The U.S. economy lost 23 million
jobs at the start of the pandemic, leading to a recession in early 2020. The economic
recession triggered by COVID-19 caused a historically rapid and deep decline in
economic activity and employment. This decline was caused by reductions in supply
(production of goods and services) and demand (spending). The Biden Administration
responded by rapidly implementing historically large fiscal and monetary stimulus with
the Inflation Reduction Act in 2021.
Unfortunately, the potential danger of pouring more money into the economy caused a
rapid increase in the inflationary rate. The U.S. economy faced recessionary trends,
rising costs of doing business, supply chain delays, and historically high gas prices. All
this has caused what Economists call sticky prices. Meaning prices rise quickly in
response to supply chain issues or demand but do not fall quickly when costs go down.
Companies with significant market share often maintain high prices even when their
production costs fall. We should not expect to see a return to pre-2020 price levels for
most goods.
Now we must deal with the Trump tariffs. There is no denying it has contributed to
higher food prices by increasing costs on imported goods and agricultural inputs, with
consumers bearing a significant portion, up to 55%, of these costs at the checkout line.
I mentioned earlier about solutions that might help. First, start comparing prices, shop at
discount stores like Costco or Sam’s Club, and buy in bulk to save. Hopefully, you have
storage space. Start buying store brands, which can cost up to 72% less than name
brand products, utilize coupon apps and reward programs. Buying locally at farmers
markets for produce or Ranches for beef may help. Better yet, grow your own garden,
you might find it enjoyable.
We always depend on our elected officials to help ease the low prices with economic
policies. But that is not going to happen soon. The reversing of tariffs on certain food
products and agricultural items can help directly reduce costs. But its overall impact is
limited on targeted tariff reductions. The 300 to 400 billion dollars that is expected
revenue from the tariffs would help the average hard-working American families
substantially if it is distributed back into our pockets. And regulating certain food
industries, such as poultry and pork plants, can reduce bottlenecks and lower
production costs.
It is going to be up to us – the consumer, to help ease our tensions of providing for our
families. This is where the old supply & demand effect comes into play. Increased
competition from suppliers will help lower prices and drive innovation. When multiple
companies compete for market share, they are forced to reduce prices to attract
customers. We the consumer must keep a competitive environment for multiple sellers
to create price wars to lower costs. What are your thoughts? This is a non-partisan
issue that we all face every day. Please leave a comment