The United States has been grappling with an affordability crisis for years, characterized by rising costs for the essentials. The “Unaffordability Five” – housing, food, healthcare, child care, and energy – have become increasingly expensive, with many Americans struggling to make ends meet.
While some argue that tariffs imposed by the Trump administration have exacerbated the problem, a closer look at the data reveals that the root causes of the crisis predate the trade war. Economist and researcher, James Galbraith, sheds light on this complex issue, attributing the rising costs to a combination of factors.
Housing affordability, for instance, has been a long-standing concern. According to the National Association of Realtors, the median sales price of new single-family homes in the United States has more than doubled since 2000, while the median household income has only increased by about 45%. This disparity has led to a significant mismatch between housing supply and demand, driving up prices and rents.
The rising cost of food is another critical factor. Food prices have increased steadily over the past decade, with some staple items, such as meat and dairy products, experiencing significant price hikes. A report by the Economic Research Service of the US Department of Agriculture found that food prices have risen by about 20% since 2010. This increase is largely attributed to factors like climate change, droughts, and crop diseases that affect global food production.
Healthcare costs have also become a major burden for many Americans. A study by the Kaiser Family Foundation found that between 2017 and 2019, healthcare spending increased by 4.4% annually, outpacing wage growth and inflation. The rising cost of prescription medications, hospital stays, and medical procedures have all contributed to this trend.
Child care costs, another critical component of the “Unaffordability Five,” have skyrocketed in recent years. According to a report by Care.com, the average cost of child care for an infant in the United States is over $1,000 per month. This expense is often cited as a major driver of the decision to have fewer children or to delay childbearing altogether.
Energy costs have also played a significant role in the affordability crisis. The US Energy Information Administration reports that the cost of gasoline has increased by about 20% since 2015, while electricity prices have risen by about 10% over the same period. These increases have disproportionately affected low-income households, which often spend a larger portion of their income on energy costs.
Galbraith argues that these rising costs are the result of a broader economic shift, rather than a single event like the Trump administration’s trade war. He points to the decline of unionization, the erosion of the social safety net, and the rise of the gig economy as key factors contributing to the affordability crisis.
While tariffs may have added to the problem, they are not the primary cause of the affordability crisis. In fact, many of the costs associated with the “Unaffordability Five” predate the trade war. To address this crisis, policymakers must look beyond tariffs and tackle the root causes of the issue. This will require a comprehensive approach that addresses the complex interplay of factors contributing to the rising costs of housing, food, healthcare, child care, and energy.
What to Watch Next:
The Biden administration has proposed a range of initiatives aimed at addressing the affordability crisis, including investments in affordable housing, expanded access to healthcare, and increased funding for child care programs. As these policies are implemented, it will be essential to monitor their impact and assess their effectiveness in reducing the costs associated with the “Unaffordability Five.”
Conclusion:
The affordability crisis facing the United States is a complex and multifaceted issue, with roots that predate the trade war. Policymakers must take a comprehensive approach to address the rising costs of housing, food, healthcare, child care, and energy, rather than placing the blame on a single event. By understanding the underlying causes of this crisis, we can work towards creating a more equitable and affordable society for all Americans.
