While the government continues to peddle the CPI fairy tale and the true cost of living (as measured by real-world inflationary indicators like the Chapwood Index) appears to be closer to 10%, instead of 2%, the middle and lower class are bearing the brunt of the pain.

This was the topic of a new NPR piece that took a look at exactly why Americans were having trouble paying their expenses. What they found shouldn’t surprise anyone: incomes were being vastly outpaced by the cost of living. “An unexpected bill like that is what separates millions of Americans from financial disaster,” the piece says.

While some of this can be attributed to poor financial planning, some of it can also be attributed to an increasingly skewed playing field that’s being created as a result of monetary policy.

As of today, 33% of U.S. adults said they are having trouble paying for everyday costs. “Even some households making above $200,000 are straining to pay basic expenses,” the report notes. For many families, it isn’t just the pandemic that has put them in dire straits. More than 33% of Americans said they couldn’t cover an unexpected $400 expense a year ago.

And in identifying the culprit, we’re going to say something we rarely ever say: NPR nails it.

“For decades, U.S. wages have failed to keep pace with the rising costs of what many perceive as essential ingredients for a successful American life: good education and health care, a home and a family.” 

In other words, the true cost of inflation is vastly outpacing wages, as we have been saying for years. For example, last year, we posted what we called “The Inflation Chart That Explains Everything”. In that article, we noted:

“Over the past 20 years, US prices of goods and services has gone up by 56% while wages have gone up by 95%, which sounds quite good. However, when we look beneath the headline, we find that hospital services and college tuition have gone by a whopping 208% and 186%, respectively. This is much higher than wage growth, and shows that key services that enable people to move up the social ladder are being priced out of their reach. On the flipside, the price of TVs, cellphone services and toys have collapsed, so people can at least distract themselves away from their social woes.”

We showed a similar chart, visually explaining just how burdensome these key expenses had become:

As we also noted, the NPR article continues: “A home mortgage and utilities can bite off half of a monthly income, especially in big cities.”

But we were told by Jerome Powell that the rising cost of houses and the never-ending spike in the housing market was creating prosperity, not ending it.

Rhonda Alvarez, a dental assistant, told NPR: “I don’t feel like, even if I’m saving, I’m saving … I’m ever going to get ahead of anything. I feel like it’s a constant struggle, you know what I’m saying?”

And it isn’t just through inflation that the government is ruining the average American. Job losses as a result of Covid have been decimating the finances of many U.S. citizens.

As part of their report, NPR took a look into the finances of several families to show just how unsustainable their budgets were. Alverez’s budget shows her spending, even while cut, vastly outpacing her income as a result of the Covid pandemic taking her job.

Alverez’s situation is being echoed across the country on a daily basis – even while Fed chair Jerome Powell insists that the country needs more inflation. Of course, Americans have trouble getting ahead not only due to lack of access to jobs and income, but also due to rudimentary misunderstandings of finance to begin with.

On top of it all, the government – who the average Joe trusts to do right by them – is telling them inflation has basically been a myth. Again, the Chapwood Index paints a different story, showing cost of living rising about 10% in major U.S. cities, annually.

It says on its site: “The myth that the CPI represents the increase in our cost of living is why the Chapwood Index was created. What differentiates it from the CPI is simple, but critically important.”

The Chapwood Index:

• Reports the actual price increase of the 500 items on which most Americans spend their after-tax money. No gimmicks, no alterations, no seasonal adjustments; just real prices.
• Shines a spotlight on the inaccuracy of the CPI, which is destroying the economic and emotional fiber of our country.
• Shows how our dependence on the CPI is killing our middle class and why citizens increasingly are depending upon government entitlement programs to bail them out.
• Claims to persuade Americans to become better-educated consumers and to take control of their spending habits and personal finances.