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Inflation is pretty much the same for all of us

The Wall Street Journal informs us today that inflation affects some household more than others. Their example is Nicole Lewis, a mother of three who lives north of Flint, Michigan:

Pay raises since the pandemic helped Lewis and her husband, now a city manager, double their earnings to what had previously seemed unattainable: more than $90,000 a year. But price hikes for everything from groceries to auto insurance still forced the couple to siphon funds from savings.

The 35-year-old Lewis now buys many basics on credit, juggling cards to protect her credit score without letting outstanding debt snowball. Trips to the beach and bowling alley are out. Shopping at thrift stores is in.

This is nuts. Their earnings doubled but they're allegedly having trouble with price hikes that amount to about 20%? There's obviously a lot more going on here than inflation.

Since 2019, inflation has raised prices by 19.2%. Here is CBO's estimate of how that breaks down by income level:

There's practically no difference. The Lewis family is in the middle quintile and experienced inflation of 19.3%.

The Journal, of course, doesn't bother with actual evidence, even though it's quickly and easily available. That might ruin a good story, after all. It's just vibes and more vibes.

17 thoughts on “Inflation is pretty much the same for all of us

  1. Doctor Jay

    What I'm reading here is past tense versus present tense. The phrase "they struggled" is past tense. When did they struggle? Before they got that big pay raise, I'm guessing. In the present, they have a big pay raise.

    And yeah, the price spikes - which by the way all the people in the financial world are describing as "supply chain issues because of covid" - did cause problems. We are now much better off, though it might not have been fun for some.

  2. erick

    Of course the WSJ doesn’t provide a breakdown of what they spend their money on, if their income truly has doubled there is no way they have less purchasing power now, be curious to see if they bought new cars, etc.

    1. gibba-mang

      "be curious to see if they bought new cars, etc."

      I follow a care dealer in NJ on TikTok and was amazed at how many young men purchase high dollar cars during covid and are now underwater with their value. Spoiler: they're unloading them at HUGE losses

  3. cephalopod

    She's 35. I would bet that she had at least 1 of those kids since the pandemic started, resulting in huge infant daycare expenses. Even if the oldest aged out of preschool in that time, she just traded for a much more expensive kid. They probably did the math on daycare costs prior to having the kid, but a 20% increase on everything else is really going to make that budget less tenable.

    I remember when my household income doubled, but having kids during that time ate away at all the new money. If you have kids, any raise you get isn't really felt until the kid reaches middle school and you don't have to pay for childcare all the time. At first you are just digging out of the debt from the first year (lost wages on maternity leave, healthcare copays, infant care, car seats, etc). After that it's mostly the kids who get an increase in their standard of living (new clothes instead of all hand-me-downs, piano lessons, travel hockey, etc). Then when the youngest turns 11 you realize you have a bit extra coming in each month. But it takes a long time to get there.

    1. aldoushickman

      "They probably did the math on daycare costs prior to having the kid, but a 20% increase on everything else is really going to make that budget less tenable."

      It's worth pointing out that the "20% increase" occured over five years, and even with "normal" low inflation, the increase over that time period would have been north of 10% anyway.

  4. KJK

    Another bullshit WSJ article.

    People on fixed incomes, like retiree's certainly feel inflation, and the increases in SS checks don't really provide much of a hedge.

    Owning a home helps since you are not faced with large increases in rent (only increases in RE taxes and operating costs).

    Of course I am not complaining about how my 401K has performed.

  5. D_Ohrk_E1

    I would discourage people from downplaying the effects of inflation. Even if the stats show that inflation has abated, it does not mean that everyone's experience is the same. The averages across the board mean some people are experiencing almost no inflation while others are experiencing very high levels. Some people have seen their auto insurance rates soar by double-digits each year for the last two. The people who have to borrow the most also suffer the most from high rates, which they then identify as inflation.

    1. aldoushickman

      "The averages across the board mean some people are experiencing almost no inflation while others are experiencing very high levels."

      To a point, but it's not like prices are random across the distribution of individual consumers. Prices are up x%, but it's not as if some lucky guy is only paying 0.5x% more on groceries but somebody else is getting charged 5x% more for the same products. Corporations haven't gotten that good at tailoring prices. Yet, anyway.

      1. D_Ohrk_E1

        it's not like prices are random across the distribution of individual consumers.

        Yes, but the things that matter most to people in the lower two quintiles -- food, rent, transportation costs (gas and insurance) -- are stubbornly high in selective categories and locations. They are feeling it more than others whose purchasing targets are higher but stabilized.

  6. gibba-mang

    How much you wanna make a bet they purchased a car they probably couldn't afford during covid and are now underwater with $1,000/mth payments

  7. lower-case

    they can't afford stuff because they lost half their net worth buying DJT stock at the top of the pump-and-dump mania

  8. Martin Stett

    Well, I live three miles east of Flint and $90k a year is a pretty good income around here.
    I think we're not getting the whole picture. Student loans? Medical expenses? Alimony and child support? How many vehicles and how many wheeled or hulled playthings? Are they the ones driving that Dodge Ram that takes $110 to fill the tank? TWO Dodge Rams?

    Still paying for cable? I have a 45 year-old antenna on a pole that brings in 38 channels. Still eating take-out food? What's your phone like? I have a Tracphone that costs me $139 a year.

    Come on people. You don't have to do without--just do smart.

  9. SwamiRedux

    Come on Kevin, have you seen the increase in caviar prices? And lefty activists made sure we couldn't get foie gras in California.

    Sheesh

  10. Rharrismt26

    Somehow everyone seems to be missing the point that when they were earning 45k/year as a family of five, they likely would have been receiving Medicaid, SNAP, and other income assistance. If they had any student loans, they likely would have been eligible for hardship deferment or paying next to nothing on an income based repayment plan. Once their income started growing, all of that went away. Speaking from experience, it is a steep climb from 45 to 90k and there isn't much to show for it along the way.

  11. cmayo

    You say inflation is pretty much the same for all of us, and I look at that chart and say that inflation for the top quintile is 6% less than inflation for the lowest quintile.

    That's not nothing.

    Also, 90K income even in Flint, for a family, is barely scraping by.

  12. jdubs

    Housing and childcare costs are the two primary reasons that inflation affects everyone very differently.

    If you have a fixed housing cost and no change in childcare needs, you have experienced a very different price experience than someone with variable housing costs and new childcare needs.

    This particulat story is likely garbage as groceries and auto insurance cannot account for the story they are trying to tell.

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