High prices for food, rent and other necessities continue to hit working people hard, forcing families to cut back spending. One reflection of this is a 4.3% drop over the past year in purchases at convenience stores.
“Americans are stopping for gas, but they aren’t grabbing their usual snacks or smokes,” complained a March 13 Wall Street Journal article, reporting reduced sales “of Doritos, Twinkies, Heath bars and Newports.” Bakery snacks are down by 9% and chocolate candy by 6.2%, and fewer people are picking up a large bag of chips that costs $7 in many stores.
But the impact of this squeeze goes much wider. Fast-food sales dropped by a double-digit percentage in the fourth quarter of 2024 compared with a year earlier, McDonald’s reports. And sales of clothing and other items in department stores have plunged 12% on apparel and 22% on sneakers so far this year.
In another article that day, the Journal bemoaned the fact that “Consumer angst is striking all income levels.” The Financial Times reports “consumer” long-term inflation expectations just hit the highest level in 32 years.
But there’s no such thing as “consumers.” This is one of the generalities bourgeois economists use to try to paper over class-divided reality. It’s the working class that faces mounting difficulties in making ends meet, in sharp contrast to the capitalist ruling families and their upper-middle-class hangers-on, who may well be racked with “angst,” but their concern is in gyrations on the stock market, not what they have to shell out to put a roof over their heads.
The superwealthy splurge on opulent digs costing tens of millions of dollars, while most working-class households spend 30% or more of their income trying to cover rent and utilities.
Look at a few examples of real estate on the market today. For $59 million you can purchase a 32,000-square-foot home built on a hill the owners had the top chopped off to facilitate construction in the glitzy Palm Springs area of California. It has seven bedrooms, three pools, an overhead shark tank and a pretty neat view.
Or there’s the Journal’s “House of the Week” in Scottsdale, Arizona, for a measly $19.5 million. It includes a fancy underground basketball court and $100,000 closet specially designed to display your sneaker collection, along with seven bedrooms and 18 baths.
In the Big Apple, where I live, the Woolworth Mansion is on the market, the largest private residence now on sale in Manhattan, with nine bedrooms and 11 bathrooms, for only $50 million.
Meanwhile, rising utility rates are putting a hard-hitting squeeze on working people. Con Edison is pushing for an 11.4% increase for electricity and 13.3% for gas in New York City, where more than 1.3 million households are already behind on their energy bills.
“I have done everything I can to manage expenses,” Mary Bove, 68, a retiree who lives with her husband in Sheepshead Bay, Brooklyn, told the New York Times. “I keep my thermostat at 63 day, 58 at night. I limit my electric usage,” but bills are still soaring, she said.
Gov’t figures lie about inflation
The consumer price index rose 2.8% in February over 12 months earlier. But this figure does not include the huge amount of money working people pay in interest, on auto loans, mortgages and credit card debt. This is because the government switched how it calculates price rises in a way that minimizes these figures.
“If we take interest into account,” reports Barron’s, “year-over-year inflation spiked to 18% in 2022, rather than the official 9%, and was still 8% at the end of 2023, when the official rate was 3.3%.”
More and more workers are being forced to put everyday purchases on their credit cards. But the annual interest rate banks charge for unpaid card balances has hit record highs, over 20%, pushing many working people deeper into debt. The vast majority of car purchases are financed with loans, with auto debt now exceeding $1.6 trillion. And 30-year mortgage rates more than doubled, from 3% in 2021 to 7% today.
Household interest payments — remember, the government doesn’t count these in its consumer price index reports — grew from $600 billion in the last quarter of 2020 to over $1 trillion by the end of 2023.
On top of the ravages of sky-high prices, “it’s getting ‘uncomfortably difficult’ to find a job,” a March 8 MarketWatch article says. While the official unemployment rate in February rose only slightly, to 4.1% from 4% the previous month, the number of workers forced to accept part-time hours increased by over 400,000, to 4.9 million.
And it’s taking unemployed workers longer to find another job. A growing number of workers find themselves jobless for at least 27 weeks, the Bureau of Labor Statistics says. But unemployment insurance runs out at 26 weeks.