[Chiugo Akujuobi, a 26-year-old, has been struggling to make ends meet in North Texas. He fled his family home in Houston earlier this year due to frequent transphobic comments from relatives and has since been living on food pantries and donations from friends. He has been working on a contract basis doing graphic design, social media marketing, and copywriting, but has struggled to find a full-time job.
Akujuobi’s situation is not unique. Millions of Americans are struggling in today’s economy, with many living below the poverty line. The poverty line for a single person in 2023 is $15,480, but Akujuobi estimates he made less than $10,000 this year.
The cost of living crisis in the US has eased somewhat, but low-income Americans are still struggling with high inflation and elevated interest rates. If President-elect Donald Trump follows through on his promise to impose tariffs on American trading partners, it could reignite inflation and worsen the situation.
Inflation is down from 40-year highs, but prices were still up 22.2% in November compared to January 2020. The Federal Reserve has been raising interest rates to combat inflation, but has stated that borrowing costs are still exerting pain on parts of the economy.
Many Americans are still struggling to make ends meet, with nearly 30% of households spending more than 95% of their disposable income on necessities such as housing costs, groceries, and utility bills. Low-income households are disproportionately affected, with 35% of households making less than $50,000 per year spending over 95% of their income on necessities.
Wage growth has begun to outpace inflation, but earnings for the lowest-income Americans have slowed sharply. Companies that cater to low-income consumers, such as Ross Stores, Dollar General, and Walmart, have reported increased sales and foot traffic.
Fed Chair Jerome Powell notes that consumers are feeling the strain, with many retailers reporting that price-conscious consumers are under pressure. Tariffs could further exacerbate the situation, with estimates suggesting that a 25% tariff on imported goods from Canada and Mexico and a 10% duty on Chinese goods could increase prices by 0.75%, resulting in a loss of $1,200 in annual purchasing power per household.
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