Data released this week by the US Bureau of Labor Statistics, the federal government agency responsible for preparing statistics on the main economic indicators, show that in the United States last November the unemployment reached 4,6%, the highest level in the last four years, and inflation was 2,7% on an annual basis, slightly down from 3% in September.
This latest figure is lower than some economists' previous forecast of 3,1%, but may have been influenced downward by the fact that no data were collected for six weeks between early October and mid-November, as a result of the shutdown, thesuspension of non-essential activities of the federal administration following the Republicans and Democrats fail to reach an agreement on the budget bill. In any case, these figures, especially those on the trend of inflation, once again forcefully draw attention to the “affordability”, that is, on the question of rising cost of living.
The elements behind the “affordability” crisis
The items of expenditure that weigh most heavily on the household budget of an average American family are food, housing, medical care e childcare servicesAccording to data from the US Bureau of Statistics, with reference to national price trends, consumer prices for food products increased by 36% overall between 2014 and 2024.
In particular, last September the increase was 2,7% compared to September 2024 and 1,4% compared to January of this year. Similarly, The average cost of renting a home and the average cost of owning a house have grown by 48% between 2019 and 2024.Spending on daycare or childcare increased 29% between 2020 and 2024. Healthcare spending, after a 10,4% increase from 2019 to 2020 due to the COVID-19 pandemic, continued to rise despite the end of the health emergency, recording a 7,5% increase between 2022 and 2023.
In light of this situation, according to last month's figures, Approximately 9,3 million Americans work more than one job to try to make ends meet.They represent 5,7% of the employed population, the highest percentage since November 1996, when Americans with at least one two-person job made up 6,5% of the total.
“Affordability”: The Phenomenon in the 2024 Presidential Election
Donald Trump He exploited the rise in inflation in his 2024 White House campaign, blaming the alleged short-sightedness of the Democratic president's economic policies. Joe BidenOn August 15th, with his trademark taste for spectacularizing political messages, The Donald went so far as to hold a press conference surrounded by egg cartons and other food products to assure American consumers that, if he returned to the Oval Office, the price of food would have started to go down.
The tycoon had the strength of numbers on his side: in January 2021, at the end of his first term, inflation had stabilized at 1,4%, before surging over the next eighteen during Biden's presidency.
In fact, as he admitted later Janet Yellen, the head of the Treasury Department in the Biden administration, the federal spending package aimed at recovering the economy to compensate for the collapse following the Covid-19 pandemic and, in particular, the direct subsidies for taxpayers and low-income families, may have contributed to the surge in inflation, which peaked at 9,1% in June 2022.
This peak, however, was above all the consequence in the short term of theRussian invasion of Ukraine the previous February 24, which caused a considerable increase in the energy price and food products. Furthermore, in the months immediately preceding the 2024 elections, inflation had returned to control, fluctuating between 2,5% in August and 2,7% in November, after reaching a low of 2,4% in September.
However, this significant contraction failed to make its positive effects felt before the vote, thus allowing Trump to gain a 3% lead over the Democratic candidate. Kamala Harris among voters from families with incomes under $50.000 a year.
The fight against inflation promised by The Donald brought the working classes to the tycoon, distancing them from a Democratic Party that seemed incapable of formulating effective strategies to create employment because it was entrenched in the defense of a policy to promote noble but abstract identity values and, in any case, unable to speak to the gut of a country increasingly concerned about the difficulty of balancing one's individual or family budget.
Trump's Second Presidency and the Cost of Living
Despite Trump's promises and assurances, the average price of eggs—which the tycoon had assumed in 2024 to be the main indicator of consumer discontent over the soaring cost of living—has risen by about a fifth in the last twelve months. Now that he's in the Oval Office and unable to keep inflation in check, The Donald has dismissed the so-called "affordability crisis" as a mere "scam." that the Democrats would have plotted against him, as he reiterated in a speech to his supporters last December 9 at Mount Pocono in Pennsylvania.
White House Deputy Chief of Staff Stephen Miller prefers to speak of a “phantom inflation”. However, regardless of the specific expressions used, the gist is that for the Trump administration the "affordability" problem doesn't exist; it's just a hoax.
Thus, in his address to the nation on Wednesday evening, making use of economic data that are not necessarily reliable, including the 33% reduction in the price of turkeys sold during Thanksgiving, claimed to have put the United States back on track. Yet, the recent 43-day shutdown by the Washington administration from October 1st to November 12th, the longest in US history, certainly didn't help address the cost of living for thousands of federal employees, who were left home without pay for six weeks. Nor did the increase in tariffs help lower the cost of consumer products, which actually increased. Consider the fact that a third of the coffee consumed in the United States is imported from Brazil and was subject to a 40% tariff until November 20th, when Trump revoked it.
A similar consideration can be made regarding the weight of protectionism on the price of some building materials (from wood to steel), which has increased the cost of a new home by an average of $17.500 since the tycoon was reinstated as president.
A hoax spread by the Democrats
Nonetheless, there are some quantitative data that allow the Trump administration to downplay the extent of the "affordability crisis," although the numbers do not justify dismissing it as a simple Democratic Party propaganda stunt. For example, despite the soaring cost of childcare, only 11% of US families have at least one child under the age of five.
Similarly, the relevance of the increase in house prices and consequently of the difficulty of purchasing them is limited by the observation that approximately two-thirds of households already own a home and that roughly half of those who took out a mortgage to purchase one did so at a fixed interest rate below 4%. Furthermore, despite rising consumer food prices, the share of disposable income Americans spend on food is slightly decreasing, falling from 10,6% in 2023 to 10,4% last year.
A psychological crisis?
Trump's attempt to downplay the "affordability crisis" and Miller's thesis on "phantom inflation" have found unexpected support in The Economist,The authoritative British weekly, generally almost never condescending towards the tycoon and his entourage, in an article dated November 27th (One weird trick to solve the affordability crisis) reduced the issue to a mere psychological question with no real economic foundation.
According to the periodical, the average American consumer would be concerned because he would only look at the absolute value of prices without comparing it with his own purchasing power. Therefore, according to The Economist,, the ideal solution would be of an equally psychological nature: to introduce a sort of "heavy dollar", following the example of what France did in 1960 with the nominal revaluation of the franc through the introduction of new currency, new franc, replacing theold francsThe new franc was worth 100 old francs. Therefore, with this reform, a good that cost one hundred old francs came to cost just one new franc thanks to a mere arithmetic trick. Ultimately, according to "The Economist," removing a few zeros from consumer prices would be enough to reassure Americans.
Dani Rodrik's recipe
Trump's preferred strategy, however, is another: relaunching the manufacturing industry through protectionismThe effectiveness of this policy, however, has been seriously questioned by Dani Rodrik, one of today's most influential economists. In a speech published in New York Times On November 16 (What Even Is a “Good” Job), Rodrik argued that automation and global market integration have led to the unstoppable decline of the manufacturing sector in advanced economies. Even the People's Republic of China has seen a significant decline in manufacturing employment over the past fifteen years.
In Rodrik's opinion, providing jobs alone would not be enough to help Americans overcome the sense of anxiety that comes from the belief that their personal future is economically very uncertain; Above all, it would be necessary to create that "good job" The title of his article refers to this: an occupation capable not only of generating an adequate income for a decent life but also of ensuring dignity and social recognition. The decline of the industrial sector would not be able to multiply opportunities for "good work," unlike the service sector and, in particular, the renewable energy sector.
However, despite Rodrik, who even proposes the People's Republic of China's investments in the green economy as a model for the United States, the "good jobs" are elsewhere. Referring once again to the US Bureau of Labor Statistics, Professions that confer income and social prestige are doctors (including psychologists), who have the highest estimated median annual income ($239.200), business executives, computer engineers, and pilots and flight technicians..
The traditional approach of the Democrats
In addition to challenging Trump's approach to the issue of affordability, Rodrik's outlined plan also criticizes Democrats' traditional legislative agenda on employment, which focuses on giving workers more bargaining powerProof of their failure would be the observation that, despite Biden's legislative achievements in this area, it was Trump who won the 2024 elections.
In following this line of reasoning, however, Rodrik seems to forget that the Democratic president failed to achieve his most ambitious project, raising the minimum wage from $7,25 to $15 an hour. It was precisely the failure to keep this promise, made during the 2020 campaign. helped swing the vote of many low-income voters to Trump four years laterUnlike Rodrik, Jerome Powell, the outgoing chairman of the Federal Reserve, is convinced that simply raising wages would help defuse the "affordability crisis." As he stated on December 10, higher wages would allow people to "return to feeling economically healthy."
The alternative of reducing expenditure items
Increasing the financial resources and purchasing power of the average consumer is not the only way to address the rising cost of living. The other possible solution is to reduce the importance of the main expenditure items. This is essentially the approach adopted, for example, by the socialist-oriented Democrat Zohran Mamdani. In fact, in this fall's campaign for mayor of New York, Mamdani focused his platform on a A project to provide free local transport and kindergartens, controlled rents and controlled food prices in supermarkets run by the municipal administration..
Despite the considerable unknown of how to find the huge resources to finance such ambitious initiatives, at least in the eyes of the majority of New York voters, the formula proved successful and Mamdani became mayor last November 4th.
Just three days earlier, on November 3, the New Mexico, governed by Democrat Michelle Lujan Grisham, had made kindergarten free for all residents of the state thanks to funds raised from royalties on the exploitation of natural resources and from the proceeds of taxes on the extraction of oil and natural gasAccording to some estimates, this program will save each family an average of about $12.000 a year.
Less ambitiously, another Democratic governor, Kathy Hochul of New York State, has established that starting January 1st, school lunch costs will no longer be borne by parents of students, and families with minor children will be able to take advantage of increased tax deductions.
Instead, New Jersey's newly elected Democratic governor, Mikie Sherrill, has pledged to proclaim astate emergency, when it takes office on January 20, which should allow it to freeze the prices of electricity, gas and water supplies for domestic use as well as the removal of waste from residential properties.
Impact the cost of services and goods, rather than increasing purchasing power, is proving to be such a virtuous and popular strategy that even some conservatives have begun to convert, at least in part, to this solution. For example, Elise Stefanik, a representative in the House of Representatives from Washington for New York State, who until Friday was a candidate for the Republican nomination to challenge Hochul in November of next year, promised to expand college tuition subsidies for deserving students and food subsidies for children under five in low-income families..
“Affordability” and the 2026 elections
46% of registered Americans say that the current cost of living is the worst I've ever experiencedThis assessment is shared by 37% of those who voted for Trump last year. Furthermore, 37% of Americans now trust Democrats more than Republicans on economic issues. The percentage of those who would trust Republicans more is 33%.
These data reverse the orientation of voters in the 2024 presidential election, when 53% of voters were convinced that Trump would be able to tackle the rising cost of living and economic problems in general more effectively than Kamala Harris. The issue of affordability is set to remain at the centre of the political debate in the run-up to the mid-term elections next November, in which all seats in the House of Representatives, a third of the Senate seats, and 36 of the 50 state governorships will be up for grabs.
It is very likely that “affordability” will be crucial in determining whether the Republican Party will maintain its majority in both houses of CongressThe outlook is not favorable for the tycoon's party. In November, Republicans suffered defeats against Democrats in the New York mayoral elections and the governorships of New Jersey and Virginia. Furthermore, on December 2, they suffered a sharp setback in the byelection held in Tennessee for one of the state's House seats. Republican candidate Matt Van Epps won by a 9-point margin, but last year Trump triumphed in Tennessee with a 22-point lead over Harris.
. . .
STEFANO LUCONI teaches US History in the Department of Historical, Geographical, and Ancient Sciences at the University of Padua. His publications include The “Indispensable Nation.” A History of the United States from its Origins to Trump (2020), US Institutions from the Drafting of the Constitution to Biden, 1787–2022 (2022), The Black Soul of the United States. African Americans and the Difficult Path to Equality, 1619–2023 (2023). The Race for the White House 2024. The Election of the President of the United States from the Primaries to Beyond the November 5th Vote (2024).
