Low-income Americans bore the brunt of job losses when the pandemic arrived. Now they’re getting hit hardest by price increases as the economy recovers. An analysis by Bloomberg Economics found that the richest Americans are experiencing the lowest level of inflation.
The headline consumer inflation rate in the U.S. remains subdued, at 1.7% – but it masks large differences in what people actually buy. Some of the biggest price hikes of recent months, for example, have come in gasoline. A gallon of regular is up 75 cents since late last year –- adding more than $60 a month to the budget of someone who fills up with 20 gallons a week. Food-price inflation is running at more than double the headline rate, and staples like household cleaning products have also climbed.
These tend to hurt low-income people most because groceries or gas take up a bigger share of their monthly shopping basket than is the case for wealthier households, and they’re items that can’t easily be deferred or substituted. On average, higher-income households spend a smaller fraction of their budgets on food, medical care, and rent, all categories that have seen faster inflation than the headline in recent years, and 2020 in particular.
The richest 10% of households captured 70% of wealth created in 2020, according to the Federal Reserve, while the bottom half got just 4%. A January study by Opportunity Insights, a Harvard research project, found that the recession was essentially over for those making at least $60,000 a year, while employment among the lowest-paid – who earn less than half that amount – was still almost 30% below pre-pandemic levels.
The number of Americans applying for unemployment benefits rose last week to 744,000, signalling that many employers are still cutting jobs even as more people are vaccinated against COVID-19, consumers gain confidence and the government distributes aid throughout the economy. The US still has 8.4 million fewer jobs than it had in February 2020. The percentage of businesses that remained closed last week rose from the beginning of March — from 38 percent to 45 percent for bars; from 35 percent to 46 percent for beauty shops; and from 30 percent to 38 percent for restaurants.
US jobless claims rise to 744,000 as layoffs continue | Business and Economy News | Al Jazeera
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