WASHINGTON—New data released Thursday show that American families had to spend 0.2% more while receiving 0.4% less in May for goods and services, while real disposable incomes fell 0.1%. The Personal Consumption Expenditures (PCE) price index—the Federal Reserve’s preferred inflation metric—remains well above its target rate of 2%. Particularly important for many households, energy prices have risen 35.8% over the last year. While PCE measures what consumers are buying, the price index measures the cost of those goods and services.
EJ Antoni, research fellow in regional economics with The Heritage Foundation’s Center for Data Analysis, released the following statement Thursday on what the latest data means for American families:
“People increasingly cannot afford to live in Biden’s America. Under this administration, prices for consumer goods have risen while real earnings have fallen, squeezing Americans’ monthly savings by 74%. Debt is exploding because housing, gasoline, and groceries are increasingly unaffordable. Anyone shopping for a July 4th party this weekend will see the highest prices on record, up 17% from last year, when the White House bragged about supposedly saving Americans 16 cents on their cookout costs.
“We continue to see economic indicators moving in the wrong direction. This is a direct result of the gross incompetence of the White House and the monetary malpractice at the Fed. Congress and President Biden have spent trillions of dollars, financed by printing by the Federal Reserve, that is now causing historically high prices on everyday goods and a 40-year high in inflation.
“Instead of reining in federal spending, the Biden administration continues advocating more of the same, while the Fed actually increased the number of dollars in circulation in May. Instead, they desperately need to contract the money supply to bring inflation under control.”
The economy is showing signs of stagflation as price increases are accompanied by indications of slowing output. Multiple recent manufacturing surveys from regional Federal Reserve banks show economic activity is slowing drastically or even declining. The Bureau of Economic Analysis just yesterday revised real GDP growth down again, finding that the economy contracted 1.6% in the first three months of the year.
Since Biden took office, Americans have faced increasingly high prices for gasoline, food, and other household items. To track Biden’s inflation, visit the Heritage Foundation’s Data Visualization page.