The average American has lost $4,200 in annual income since President Biden took office — entirely wiping out gains made under the Trump administration, an analysis from the Heritage Foundation shows.
The losses come down to surging inflation and higher interest rates, experts at the conservative think tank said in a Thursday report.
Their analysis found that the average American has lost about $3,000 in annual purchasing power because consumer prices, which have risen 12.7% since January 2021, have spiked significantly faster than wages.
Wages have risen just 8% over the same period, which has effectively resulted in a pay cut for Americans struggling to pay for daily necessities including food, gas and rent.
Higher interest rates and borrowing costs have also reduced the average person’s purchasing power by another $1,200, according to the report.
“Simply put, working Americans are $4,200 poorer today than when Biden took office,” said EJ Antoni, a research fellow in regional economics with the Heritage Foundation’s Center for Data Analysis.
“This financial catastrophe for American families is the direct result of a president and Congress addicted to spending our money, combined with a Federal Reserve compliantly enabling this addiction by printing more dollars.”
Under the Trump administration, Heritage said the average American’s annual earnings had increased by $4,000.
Antoni said Americans are in a “vicious spiral” and many have taken on additional debt to cope with higher living costs.
“Now, the Fed is finally fighting inflation, which is pushing up interest rates and increasing financing costs,” he said. “Rates on all kinds of consumer debt are rising. Mortgage interest rates have doubled since Biden took office, greatly increasing Americans’ monthly payments.”
Concerns about persistent inflation were renewed this month when federal data showed consumer prices had increased 8.3% in August compared to the same month one year earlier — a figure that was worse than what economists had been expecting.
Biden downplayed the worse-than-expected data, suggesting that an improvement in gas prices was a sign that inflation has started to moderate.
“Today’s data show more progress in bringing global inflation down in the US economy,” Biden said in a statement last week.
“Overall, prices have been essentially flat in our country these last two months: that is welcome news for American families, with more work still to do.”