Inflation hits California families and shapes views on the economy

On paper, the US economy appears to be doing well, with unemployment at historically low levels. But most Americans have an uneasy view of Current surveysThe persistent inflation of the fee of living was cited as the rationale for this pessimism.

“As the 2024 general election now begins in earnest, voters’ assessment of the economy and the candidates’ ability to handle it will, as usual, have a strong influence on the outcome of the race,” The Brookings Institute stated in a recent evaluation of economic attitudes. “With just over seven months to go until Election Day, the economy remains a critical advantage for former President Donald Trump and an obstacle to President Biden's re-election chances.”

Biden doesn’t should worry about losing California to Trump, nevertheless it has one in every of the very best inflation rates within the country, According to Moody's Analytics, the already outrageously high cost of housing and living is getting worse. This is the most important think about California's highest level of functional poverty of all states: According to the US Census Bureau, it’s 13.2%, which is about 50% higher than the national rate.

The Public Policy Institute of California, using an analogous statistical method, found that 1 / 4 of Californians live either in poverty or financially on the stingRecently, the PPIC examined the Effects of inflationespecially for California families struggling to pay for housing, food, and other necessities.

According to PPIC, these basic needs cost low-income California households a mean of about $26,000 in 2018-19; by 2024, these households would wish to spend over $32,000 for a similar goods and services. By comparison, the highest-income group spent a mean of $82,000 on these basic needs in 2018-19, which might cost nearly $100,000 in 2024.”

The PPIC found that “prices of products and services have increased unevenly, with various impacts on households with different income levels. Food prices have increased by 27% in comparison with April 2019, and gasoline prices have increased by 29%. While spending on these goods and services accounts for a big portion of most household budgets, lower-income households spend just about all of their resources (83%) on food, housing, transportation (including gasoline), and healthcare.”

Obviously, those on the lower rungs of the economic scale have more difficulty adjusting to rising living costs. It's no exaggeration to say that inflation is a major reason why so many Californians are unable to move up that ladder.

At the same time, efforts to curb inflation have a cumulative effect. The Federal Reserve System maintains high interest rates to cool the economy and reduce inflation. But these rates make it harder to buy homes and negatively impact businesses, which often raise the prices of goods and services to maintain profits.

Inflation also hits the public sector, increasing the cost of providing services and wreaking havoc on state and local government budgets. This is one of the reasons why the State budget suffers from a large deficit and why many cities, counties and college districts are struggling to balance their budgets.

Overall, fast food restaurants in Mississippi had the bottom prices, while those in Hawaii had the very best, followed by New York, New Jersey and California.

For example, a McDonald's Big Mac costs a mean of $5.11 in California, but only $3.91 in Mississippi.

Dan Walters is a columnist for CalMatters.

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