Here’s the view of the economy reflected in the funhouse-mirror politics of the Trump administration. There is no affordability crisis. But if there is an affordability crisis, it’s President Joe Biden’s fault. President Donald Trump is solving it; alternatively, he has already solved it. But also: What affordability crisis? People have it better than they’ve ever had it before.
Forget what he said as a candidate, or even what he said when he introduced his tariffs in March, when he seemed to acknowledge that families might have to buy two dolls for their children instead of 30 this Christmas season—now upon us, by the way—because of his tariffs, which will eventually make the economy great. Also, why are farmers getting a reported $12 billion bailout if there’s no crisis? Never mind, look over there at immigration!
That torrent of doublespeak only continued this week, when Trump traveled to Pennsylvania to give a speech about inflation. It also came during an interview with Politico’s Dasha Burns, in which Trump graded his economy “A-plus-plus-plus-plus-plus.”
Americans have been worried about inflation, the increasing cost of living, and the economy in general since the Covid-19 pandemic began. During the Biden administration, the economic concerns were confusing for many economists and other observers because so many metrics indicated that the economy was good and getting better, not just for the very rich but for many low and middle incomes as well. In fact, as a candidate, Trump ran on addressing affordability issues, everything from gas to groceries to mortgage rates, and accused the Biden administration of tinkering with economic numbers to make conditions look better than they were. But now, just as Democrats are running on—and winning elections on—fixing the affordability crisis, he says there isn’t one.
What does it mean to be in an “affordability crisis”? Prices always go up, and whether families can afford what they need or want has a lot to do with their incomes. So how do we assess whether the United States, writ large, really is in an affordability crisis? It turns out that we can measure not just how people feel about the economy but all of the ways that goods are getting too expensive for working Americans. Economists are looking for more detailed ways to show affordability problems than would be hinted at by some of the broader indicators economists normally rely on. Those everyday indicators show that American families are stretched and stressed.
It’s not just vibes driving Americans to feel gloom about the economy, but their real struggles to pay their bills and build toward a more secure future. A full year into Trump’s second term, fewer voters are buying his accusations that it’s somehow still Biden’s fault.
Regular polling from YouGov shows that more Americans than ever say their incomes aren’t stretching to meet their expenses, and nearly half of those who make less than $50,000 a year are worried about paying for basic necessities. Increasingly, they’re blaming rising prices not just on government spending—which voters usually think is the cause of their economic woes—but on large corporations trying to maximize profits, as well as Trump’s tariffs, which economists do believe are driving escalating costs right now.
Naturally, there are two components to whether families can afford their lives: the cost of goods, and how much they make. During the pandemic, family incomes were actually on the rise, and toward the end of Biden’s term they were rising from the bottom faster than inflation.
Bharat Ramamurti, former deputy director of the White House National Economic Council, said part of the problem was that most of the increased income families were bringing in was getting eaten up by inflation. “Imagine if you get a $10,000 raise but then you spend $9,500 out of your new $10,000 just paying for the same stuff you were buying before,” he said. “That’d be really frustrating, because you’re like, OK, finally, I can go on a vacation, or I could save a little bit more or whatever.” Instead, the increases went to rent or utility bills or groceries, and people saw that as the government’s fault.
Ramamurti has looked at housing, where affordability has decreased over time. But he said an even more important indicator is the rate of home sales, which has gone way down over the past year. In a normal market, families would buy houses and move as they saw new opportunities or their families grew. But they’re not doing that now, largely because still-high interest rates are locking people into the much lower rates they were able to get if they were lucky enough to buy during the boom in 2020 or 2021. The decreased sales means families are reluctant to take on new mortgages, even if they’re ready to move.
On a historical scale, interest rates are not that bad, but they are still higher than most adults trying to buy homes today remember them being. But there are other indicators showing why families might feel stretched. The Century Foundation showed that utility bills are up 32 percent since 2022. What’s worse, an increasing number of families headed into winter with past-due balances, meaning they were at risk of having their power shut off during the coldest months.
The Century Foundation’s Angela Hanks also pointed to another indicator that worries her: More and more families are taking on debt, especially as buy now, pay later services like Klarna and Affirm become more widely available. And they’re not taking on debt to pay for bigger, luxury items. “A lot of families are using it because they need to pay [for] their groceries, and [paying on] installment like that is a sign of people struggling.… People’s lives are just more financialized in all kinds of different ways that lead to more precarity, more debt,” she said.
Debt is an underexplored component of how families are feeling, because if we’re not paying attention to the hundreds of dollars a family might have to pay just to meet their minimum credit card or loan payments every month, we’re missing a huge chunk of how hard it is for them to budget right now.
But the two biggest factors coming into play that are hitting families especially hard heading into the new year are the costs of childcare and health care, said Ashley Burnside, a senior policy analyst at the Center for Law and Social Policy, or CLASP. “We can’t talk about affordability in this moment without naming the huge health care costs that families are now facing because of the expiration of the premium tax credits,” she said.
She continued: “That unfortunately means a lot of families are either going to be paying much, much higher premiums than they had before, or choosing to be uninsured. And that then means if there is a health emergency and a family does not have thousands of dollars in savings, they have to end up in urgent care or delay and need a doctor’s appointment, which could lead to a financial spiral for families.… It’s not just low-income families that are feeling that, it is also middle-income families, and even what some people may call higher-income families, because we all need health insurance. So I do think there’s that reckoning happening in our nation right now too.”
These escalating expenses all come atop the well-documented price increases of basic household needs, such as groceries and gas. Here, families at the bottom of the income ladder are suffering the most. For low-income families, food makes up almost a third of their budget, so the rising costs of groceries impacts them deeply. They are not just making hard choices about where to save, but may go hungrier, especially as benefits such as food assistance come under attack.
Lorena Roque, associate director for labor policy at CLASP, said she sees data showing that a lot of families are taking on two or more jobs just to make ends meet. But even that might no longer provide a full picture of who is struggling because the administration has been hostile to the kinds of data-gathering efforts that would give us a fuller picture of the economy, like the rates of Black and Latino unemployment.
That also might explain why Trump is pushing back on the idea that there is an affordability crisis, and why he keeps insisting that the economy is great and that he is also going to make it better. “They’re purposely trying to kill the integrity of very objective agencies like the [Bureau of Labor Statistics],” she said. “It’s like an attack on the truth. It’s an attack on data and how people are feeling.… I think they’re trying to hide the truth.”
All of this also shows an opening for Democrats to hit Trump with the same attacks he used against Biden last year, and across the country, Democratic candidates are doing precisely that. Trump has countered that the claims of Democrats are a hoax. But families do need real relief, and they’re unlikely to get it from an administration that continues to deny how its policies may be affecting them—even as they can see it for themselves.
