1y ago

Americans need an extra $11,400 today just to afford the basics

www.cbsnews.com Americans need an extra $11,400 today just to afford the basics

Compared with 2021, the typical household must spend an additional $11,434 annually just to maintain their standard of living, analysis shows.

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I gave the methodology a read, and it's a real head scratcher. I haven't sat down and done the math myself, but if I were going to, I would first investigate all the assumptions they had to make, such as:
using the Personal Consuption Expenditures PCE measure of spending instead of the Consumer Expenditure Survey (CE) , since one includes military and government spending on behalf of households and the other doesn't
Using 2019/2020 aggregate spending estimates at the census division level as part of a formula to estimate Jan 2021 spending data. (2020 was not a normal year for spending)
Using a Gross CE/PCE ratio at the census division level to estimate consumer spending in each census division's constituent states
using the PCE growth nationally (remember what it includes) as a substitute for statewide , statewise expenditure growths.
Again, using census division aggregate data to estimate state level consumer units per household
providing no validation that their methodology for transforming PCE values into CE values works (it should have been as simple as calculating it for other years, say 2015,2016, and checking the accuracy)
using Census division CPI instead of state data.
Anyway, this is where I would start picking this mess apart. If I were so inclined.
From this little bit, I'd be concerned about the analysis using suppressed spending in 2020 as the starting point in 2021, as well as including spending from outside the CPI basket and non household entities in CPI estimates. I'd be concerned about over generalizing the states by estimating using their census units. Basically, I'd consider this report skeptically at best if no additional validation can be provided.
- It's not really that far off the mark when you just look at your own budget at home, though. Shit on average costs about 10-20% more (and for some products, even higher than that) than it did 5 years ago. Hell, 85/15 ground beef was ~$5/lb back in 2019/2020 where I live, now it's $7.50/lb, that's 50% increase right there. Same with milk and eggs.
  Bottom line: I think you way over analyzed something that can easily be solved by just looking at your grocery and monthly bills now vs a few years ago.
  Their estimate of $11k is too high for me. But I can easily see this being the case in some areas. For me, our cost of living has definitely increased by about $500/month, so $6000/yr. But, I also live somewhere with a relatively low cost of living.
  
  People will use bad analysis to play on your gut feelings because they want you to act a certain way. In this case, republican senators created a flawed analysis specifically to make people who feel like you do wrongly associate rising costs with democratic policy and policy makers. Whose best interest is it in to uncritically accept their analysis? Who gains from their overestimate?
  
  Huh? Where did I say anything about politics?
  I was simply saying it's far easier to figure out how much inflation has effected you by looking at your monthly bills' trend over the last few years. You have to be on another planet if you don't think inflation has been awful. Some of that has been due to Democrats' policies, some of it Republicans', and the rest of it simple corporate greed. But none of that commentary was on my original comment.
  Edit: I should add that the economy is far too complex and massive for one person to immediately impact it to that degree (barring some insane, drastic action). People who think the president has a magic economy and gas price button are idiots. Congress ultimately controls a large amount of economic impact (e.g. enacting the Build Back Better bill that Biden was the PR spokesperson for).

40 comments