In simple terms, when wages grow faster than inflation you’ve got more money to save, spend, and invest for the future, and when inflation grows faster than wages you not only have to pay more for the same goods and services but you’re pressured to spend your savings now on items you planned to buy later because prices will only go up over time (which also adds to inflation in the short term by creating even more demand).
Keep that in mind while looking at this chart:
(click one of the numbered comments on the chart to read more)
(click here for a larger image)
The chart shows what many already know: Under Trump real wages increased, prices remained low, and goods were plentiful. During the COVID-19 lockdown Democrats paid out stimulus money (the upwards spike) and pushed for increased wages while people only bought essentials, pushing inflation down. Finally, under Joe Biden the economy started to open back up, the stimulus was stopped (the downwards spike), and people started spending on goods, most of it still in cargo ships waiting at sea or stuck on loading docks waiting for shipment, all of which forced inflation up.
And it will get worse before it gets better…if it gets better.
In short, you made money under President Trump, was given money and forced to save it during the lockdown, and are now giving it all back and more under Joe Biden and the Democrats.
The chart reminds me of two lines from Charles Dickens’ 1850 book “David Copperfield“:
“Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness.
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery”
We’ve gone from happiness under former President Trump to misery under Joe Biden in less than one year. As Dickens might remark:
“The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are forever floored.”
Thanks for Reading!