Yahoo Finance I’m an Economist: What a Biden Win Could Mean for Rising Costs of Living
If you’ve felt an increased cost of living over the past several years, you’re not alone. The media has well documented how much prices have increased on most everyday items — from grocery store trips to the clothes you wear.
Many people often look for someone to blame when their wallets are affected. Typically, this is the current president. But how closely is the cost of living tied to the presidency? And what could another Biden win mean for rising costs of living?
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“To see what a second Biden term in the White House would mean to the US economy, one need only look at the first term for indications,” says Rod Skyles, founder of The Unconventional Economist. “Reckless deficit spending (albeit also the fault of Congress) has driven prices of what the average person buys much higher than the government is reporting.”
Let’s dive a little deeper into what the cost of living might look like during a second Biden term:
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How to Measure The Rising Cost of Living
The inflation rate is the percentage change in the yearly price of goods and services. We commonly measure inflation using the Consumer Price Index (CPI) and the personal consumption expenditures (PCE) price index. The CPI measures the change in prices paid by U.S. consumers over time and is calculated by the U.S. Bureau of Labor Statistics. The PCE is calculated by the U.S. Bureau of Economic Analysis.
According to policymakers at the Federal Reserve, an inflation rate of 2% is considered acceptable for a stable economy without being too low to weaken the economy. The past several years’ average inflation rates were:
2020: 1.2%
2021: 4.7%
2022: 8.0%
2023: 4.1%
Unfortunately, the documented inflation rate doesn’t always tell the entire story.
Skyles went on to say, “There has been a new set of postings on social media recently taking grocery baskets from an online order in 2021 and reordering that same today with shocking results, prices more than double and sometimes triple what they were just three years ago.”
Biden’s Policies and the Predicted Effects on Cost of Living
However, the news isn’t all gloomy. Biden has made some policy statements during his campaign that could affect the cost of living for some Americans.
In particular, families, the disabled, the elderly, and students could see a cost decrease in certain aspects.
Medical Costs
Rising pharmaceutical drug costs are one way Americans have been feeling the effects of inflation. Under the current Biden administration, Biden signed the 2022 Inflation Reduction Act, which included provisions to lower the price of insulin to $35 a month.
The Biden administration also negotiated lower prices for ten major pharmaceuticals, including medications to manage diabetes, heart conditions, and arthritis.
Taxes For Families With Children
President Biden wants to reduce taxes for families with children if he is elected to a second term. As of February 2024, the Child Tax Credit is under consideration in Congress. The Tax Relief for American Families and Workers Act of 2024 would overhaul the tax benefit since the previous Child Tax Credit expired two years ago.
The Child Tax Credit expansion would make it easier for more families to qualify. While the original Child Tax Credit required a parent to have at least $2,500 in annual income, taxpayers could use their income from the current or prior year to calculate the credit.
This could be helpful for families that have experienced a year of lower income or unemployment. It also makes it easier for families with two or more children and low incomes to qualify for a larger tax credit.
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Education Costs
Biden aims to invest in registered apprenticeships and career technical education programs at a higher rate than any prior administration. Biden also wants community college tuition to be free.
These moves could save you significant money if you want higher education or technical training to achieve a certain career.
Housing
With the 30-year fixed-rate mortgage currently above 7% and high prices, buying a home is too expensive for many Americans. Biden has said that his administration plans to create an additional two million affordable homes to help increase the affordable housing supply. However, there is no official timeline for completing these homes.
Unfortunately, some experts predict that a Biden win could mean no dramatic shifts in the housing market in the next few years. Interest rates are predicted to remain relatively high under a Biden administration to keep prices down.
The Bottom Line
It is impossible to predict the cost of living under Biden, just as it is impossible to predict what it could be under Trump. The best predictions we can make are based on the current Biden presidency and his campaign promises.
“The US economy is a BIG economy, and like a massive ship, it takes time to turn,” Skyles said. “Take out just the deficit spending of the US government and we have had negative economic growth the last three quarters. The slide for the economy is already in motion, and more of the same policies will result in even higher inflation (with respites during a deep recession) and more economic damage to the average citizen.”
For the average person to start seeing some relief on everyday purchases, it will take more than just talk from the Biden administration. They must put some of their campaign promises into motion if elected to a second term.
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This article originally appeared on GOBankingRates.com: I’m an Economist: What a Biden Win Could Mean for Rising Costs of Living
