The American consumers are feeling increasingly frustrated, struggling to make ends meet in a financial landscape that seems to be growing more challenging by the day. Whether it’s the rising costs at the grocery store or the rising prices for basic goods, it’s clear that something isn’t right. Many people feel as if they can’t catch a break, and that sense of unease has only intensified in recent years.
A significant factor contributing to this frustration is the combination of inflation and new tariffs. While some may argue that tariffs aren’t a big deal, they are, in fact, a form of taxation that directly affects consumers. The Trump administration’s proposal to increase tariffs could push the effective tariff rate to 8% by 2025. That rate would be the highest in over half a century, equaling or surpassing the levels seen in the 1960s, and even surpassing rates seen immediately after World War II.
This increase in tariffs would have a real-world impact, with a new report from the Tax Foundation estimating that these tariffs could cost the average household $2,000 per year in lost disposable income, factoring in inflation. For many Americans, especially those earning less than $100,000 annually, this is a significant financial strain. With the cost of everyday goods, like electronics, natural gas, and even basic food items, rising as a result of tariffs, it’s no wonder that many consumers feel like they’re being squeezed.
The price hikes caused by tariffs would only compound the already substantial increase in costs driven by inflation. The Consumer Price Index shows that over the last five years, inflation has surged by over 23%, the highest rate in more than three decades. To put that in perspective, the median inflation rate over the past 75 years has been just above 14%. This means the average cost of everyday items, like chicken, bread, and ground beef, has increased by more than $2, $0.50, and $1.50 respectively since early 2020. While some items, like bananas, have remained relatively stable, grocery bills across the board have gotten significantly higher.
For many households, these rising prices are already a burden. Nearly 25% to 30% of Americans live paycheck-to-paycheck, with little room for unforeseen expenses. For those who don’t, the wages aren’t keeping up with the increasing cost of living. In fact, in the last five years, real wage growth has been negative, with income actually declining by 5% after factoring in inflation. This marks a troubling trend, as it’s the first time in decades that the average person has seen such a sharp drop in real income over a four-year period.
All of this has led to a growing sense of pessimism about the future of the American economy. Despite the occasional optimistic report, surveys show that fewer people are expecting economic improvement than at any point in over a decade. After enduring a period of high inflation and the looming threat of increased tariffs, it’s hard to blame them. The American consumers are weary, and unless wages begin to rise significantly or inflation is brought under control, many may continue to feel financially squeezed for the foreseeable future.
