Here's Why So Many American Families Are Feeling Extreme Financial Stress

Tyler Durden's picture

Submitted by Michael Snyder via The Economic Collapse blog,

When the cost of living rises faster than paychecks do year after year, eventually that becomes a very big problem.  For quite some time I have been writing about the shrinking middle class, and one of the biggest culprits is inflation.  Every month, tens of millions of American families struggle to pay the bills, and most of them don’t even understand the economic forces that are putting so much pressure on them.  The United States never had a persistent, ongoing problem with inflation until the debt-based Federal Reserve system was introduced in 1913.  Since that time, we have had non-stop inflation and the U.S. dollar has lost more than 98 percent of its value.  If our paychecks were increasing faster than inflation this wouldn’t be a problem, but in recent years this has definitely not been the case for most Americans.

And unfortunately inflation is starting to accelerate once again.  In fact, it is being reported that inflation rose at the fastest pace in four years in January…

The prices Americans pay for goods and services surged in January by the largest amount in four years, mostly reflecting a rebound in the cost of gasoline that’s taking a bigger chunk out of household incomes.


The consumer price index, or cost of living, rose by a seasonally adjusted 0.6% in January, the government said Wednesday.

Meanwhile, our incomes have been incredibly stagnant.   In fact, we just learned that median household income did not go up at all during 2016.

This is one of the reasons why we consistently see families fall out of the middle class month after month.  Even if you keep the same job year after year, your standard of living is going to steadily go down unless your pay goes up.

The things that we all spend money on month after month just keep going up in price.  I am talking about food, housing, medical care and other essentials.  If there is one thing that we can always count on, it is the fact that things are going to cost more tomorrow than they do today.

Let’s talk about food for a moment.  Whenever I go to the grocery store, I am almost always shocked.  I still remember a time when I could get everything that I needed for an entire week for about 20 bucks, but these days you can’t even fill up one cart for 100 dollars.

That is because food prices have been rising aggressively for many years.  The following is a list that was posted on The Economic Policy Journal that shows how much some food and grocery items have increased over the past decade…

1. Tobacco and smoking products

-Price increase: 90.4%

2. Margarine

-Price increase: 63.6%

3. Uncooked ground beef

-Price increase: 46.3%

4. Shelf stable fish and seafood
-Price increase: 45.0%

5. Prescription drugs
-Price increase: 43.5%

6. Rice, pasta, cornmeal
-Price increase: 40.3%

7. Bread
-Price increase: 38.9%

8. Snacks
-Price increase: 38.4%

9. Miscellaneous poultry including turkey
-Price increase: 37.0%

10. Apples
-Price increase: 36.6%

11. Frankfurters
-Price increase: 35.8%

12. Canned vegetables
-Price increase: 35.3%

13. Salt and other seasonings and spices
-Price increase: 34.0%

14. Miscellaneous fats and oils including peanut butter
-Price increase: 34.0%

15. Miscellaneous processed fruits and vegetables including dried
-Price increase: 33.7%

16. Bacon and related products
-Price increase: 33.2%

17. Fresh whole chicken
-Price increase: 32.5%

18. Cakes, cupcakes, and cookies
-Price increase: 32.1%

19. Flour and prepared flour mixes
-Price increase: 32.1%

20. Canned fruits
-Price increase: 32.0%

And thanks to out of control government spending and reckless manipulation by the Federal Reserve, we have come to a time when inflation is starting to accelerate once again.

According to John Williams of, if honest numbers were being used the government would be telling us that inflation is rising at a 6 percent annual rate for the first time since 2011.

At the same time, evidence is mounting that U.S. consumers are simply tapped out.  Previously, I have explained that interest rates are going up, consumer bankruptcies are rising, and lending standards for consumers are really tightening up.

All of those are things we would expect to see if a new recession was starting.

And today we learned that the number of Americans refinancing their homes has fallen to the lowest level that we have seen since 2009

A slowdown in refinancing pulled down the total mortgage application volume last week as changes to certain government-loan programs made refinances less lucrative. Refinance volume now stands at its lowest level since June 2009.

If you will remember, we also saw a slowdown in mortgage refinancing just before the great financial crisis of 2008.

For mortgage applications overall, they are now down almost 31 percent from where they were a year ago…

Total mortgage application volume fell 3.7 percent on a seasonally adjusted basis last week from the previous week, and are nearly 31 percent lower than the same week a year ago, according to the Mortgage Bankers Association.

A 31 percent decline in a single year is catastrophic.

If this continues, it won’t be too long before everyone is talking about a new housing crash.

And we also learned this week that FHA mortgage delinquencies increased during the fourth quarter “for the first time since 2006″

Federal Housing Administration mortgage delinquencies jumped in the fourth quarter for the first time since 2006, the Mortgage Bankers Association reported Wednesday. The FHA insures low down-payment loans and is a favorite among first-time homebuyers.


The seasonally adjusted FHA delinquency rate increased to 9.02 percent in the fourth quarter from 8.3 percent in the third quarter, MBA data show.

So many things are happening right now that we have not seen happen in many years, but most people are choosing not to see the red flags that are popping up all around us.

None of our long-term economic problems have been fixed.  And even though Donald Trump won the election, the truth is that our economy is in the worst shape it has been since the last financial crisis.  I continue to encourage all of my readers to get prepared for very hard times, but just like back in 2007 we are experiencing a wave of tremendous optimism right now and most people think that the party can somehow continue indefinitely.

Whether Donald Trump won the election or not, the truth is that a major economic downturn was going to come anywayYou see, Donald Trump is not some magician that can just wave a wand and somehow make the consequences of decades of very foolish decisions instantly disappear.

We have been on the biggest debt binge in human history, and there is going to be a great price to pay when this immense debt bubble finally bursts.

Unfortunately, most people are not going to acknowledge the truth until it is too late.

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PirateOfBaltimore's picture

Everything is fake in Potemkin America.

VWAndy's picture

 Seems to be a world wide thing.

Never One Roach's picture

How about Bush and Soweto giving Americans zero yield on their savings account. That's one reason.

Soul Glow's picture

Negative rate when inflation is factored in.  Real rate of return....

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) Soul Glow Feb 17, 2017 11:18 AM

But Central Planning keeps telling me that inflation is ZERO. Somebody's obviously telling lies. I wonder who?...

Soul Glow's picture

Ironically silver is $18.  Which it was back in 1979.  Imagine that, everything has gone up except silver, which Vikings would raid for and Kings would die for.  Oh well, more for me.

Peak Bull's picture

Silver is mostly an industrial commodity. If Vikings were planning raids today, it would be for Platinum and Gold, and MAGA hats. They would not be raiding for piles of industrial metal.

BigFatUglyBubble's picture

"You see, Donald Trump is not some magician that can just wave a wand and somehow make the consequences of decades of very foolish decisions instantly disappear."

The problem is he is talking like he is one, and is acting like he can.  All that is doing is making the bubble bigger, making the rich get richer, and the poor get poorer.

Ram Man's picture

Damn it is great to be rich.

Miffed Microbiologist's picture

Unfortunately this gocery list gives rise to your avatar. Why pay such prices for junk? With a small garden, fruit trees, chickens and turkeys I have so much I trade with my friends and neighbors and still give a lot away. Do you know how much asparagus you get with just a few plants? I pulled off 4 five gallon buckets off my lemon and lime trees. Even I can drink that many margaritas.

Americans are just too fat and lazy to grow food and cook it. Food in their minds comes from a box or can. They'd be shocked how cooking from scratch is so much more affordable and far more healthier than slathering a tub of margarine on wonder bread.


BooMushroom's picture

It's amazing when you consider the economic value of an orange tree, especially when you consider the price of alternative snacks.

BooMushroom's picture

It's amazing when you consider the economic value of an orange tree, especially when you consider the price of alternative snacks.

BooMushroom's picture

It's amazing when you consider the economic value of an orange tree, especially when you consider the price of alternative snacks.

Killdo's picture

In Japan (or Serbia and Argentina)  - most people do that. They produce their own fruit and veg and share it with friends. Every tiem I go to Serbia, my neighbors and cousins bring me buckets of organic apples/eggs/pears/Quince/Figs  etc they grow in their gardens. They live in a city but have gardens.

Apart from people my parents' age - I don't know any Amercans who actually cook dinners for their friends (or anything at all). Young amercans are the worst in my experience - they don't know anything and they eat unhealthy fake food.

I was in Argentina a week ago - everyone I met there was a good cook (especially their bbqs are the best I have ever seen)

Seasmoke's picture

Get Gold. Got Gold ??.... Good !!

Houses Depreciate's picture

The solution is falling prices.

LawsofPhysics's picture


hundreds fo trillions in paper/digital claims have been created and continue to be issued in an exponentially increasing manner.

they are beginning to seek out real assets.

hedge accordingly.

Houses Depreciate's picture

In other words, liquidate and get rid of every cent of debt you got and hold onto every dollar you've got. You'll be glad you did.

BigFatUglyBubble's picture

Yes, extra toilet paper is always good to have.

Houses Depreciate's picture

If your dollars are so worthless, send them to me.

froze25's picture

I agree, we will see a great deflation before inflation.

VWAndy's picture

 An actual stable MOE is the only way to protect our labors real value. Stable meaning unchanging.

VWAndy's picture

 Inflation is theft.

  When economists are talking about inflation they are talking about the rate of theft. Just so everyone is clear on this.

O C Sure's picture

And don't forget that since this theft is enFORCED it is robbery too.

VWAndy's picture

  Team fiat vs everyone doing honest work. If the government is forcing its people to use fiat its already been corrupted to shit.

O C Sure's picture

"Team fiat vs everyone doing honest work. If the government is forcing its people to use fiat its already been corrupted"

Yes. Corruption / injustice is the principle of all perverted forms of government.

Prior to the panic of 1906, what the dishonest banks were doing was theft since the taking of other people's money unjustly was done by deceit. Post 1913, what the dishonest banks are doing is robbery since the taking of other people's money is the monopolization (by force) of deceit.

Their solution to the dishonest activites of dishonest banks was not to correct (or simply allow them to self correct) the unjust practices but instead to assume the practices to themselves under the monopoly. Therefore, it is this principle of dishonesty with regards to the monopoly's practices that ought to be addressed if equality (justice) is to be restored.

chunga's picture

Market free, demand and supply. Fake, enforced economies of scale made easy by govt. red tape and regulations that make it nearly impossible for small biz.

Take all that and whip it into wall street's financialization model that demands infinite fake growth, and a massive unproductive skim and it's no wonder people at the bottom of the ponzi are broke.

froze25's picture

What you talking about the Welfare queens have never had it better... Oh you mean the people that still work for a living, yes they are F'ed in the "A".

Sonny Brakes's picture

Inflation along with taxation leave working people further indebted at the end of each week, but don't worry because immigration, both legal and illegal, won't cause your wages to drop and the cost of your day to day expenses to rise, now will it.

vq1's picture

us currency in circulation:

1986 - 194 billion

2017 - 1494 billion 

total notional derivatives (estimated)

1.5 quadrillion 


Please enjoy the slow, systematic... whatever this is thats happening. 

A. Boaty's picture

Don't worry. They have it all perfectly hedged.

gatorengineer's picture

It would get even more interesting if there was an amount of Total FIAT in circulation....

Soul Glow's picture

You forgot beer.  Up 100%.  Or at least it fells that way.

vq1's picture

please dont take my comment the wrong way (not speaking economically).

Modern american micro-brewers are making some of the best goddamned beer in history. IMHO

EDIT: and they are everywhere! No state without many brewers they can be proud of. 

edifice's picture

Sure you aren't drinking twice as much? ;)

A. Boaty's picture

At a 2% annual inflation rate, prices will double every 35 years. The above figures have prices going up faster than 2%, the Federal Reserve's supposed inflation target.

Bill of Rights's picture

We need more distractions so the dumbed down public won't notice.


Maybe we could try racism? no we did that

Maybe we could try Terrorism? No we did that as well

Maybe we could try some home grown rioting? no we did that

Maybe we could try blaming the media? no we did that already

Maybe we could blame the weather or global warming perhaps? no we did that

Maybe we could try using the plague or a virus? no we did that...

Ya were fucked alright

insanelysane's picture

Oreos.  Double Stuff is looking like 1.25X stuffed and they have come out with a Thin Stuff.

Coffee Rolls at local doughnut shops are smaller than the doughnuts.


Dead Indiana Sky's picture

The last box of Frosted Flakes we bought was so thin it could barely sit upright.  Like a picture frame, it needed a prop.

VarenneRiver's picture

Hilarious! If I see one more product that says "new packaging!" I swear. All that means is less of the product and probably a higher price.

i miss the days when you could by a massive box of cereal for 2.00.
Now the thin ones cost 4 dollars.

Switch to steel cut oatmeal. Cheaper and better for you.

therover's picture

"Switch to steel cut oatmeal. Cheaper and better for you."  FUCK YEAH ! That stuff is awesome.

What about the fucking paper towels and toilet paper (real toilet paper not the fake fiat kind).

I take 2 shits and the roll is empty !!!


NoWayJose's picture

When the first rolls of sub-4 inch TP came out looking like adding machine tapes, I rounded up all then-standard 4.25 inch rolls I could find.

au_bayitch's picture

Its the fiber in the oatmeal

edifice's picture

Potemkin cereal box. Has a large area, small volume. LOL