Inflation is Strangling Rural America – 91% of Earnings Going for Expenses

Photo by Jp Valery on Unsplash

Inflation would seem non-discriminatory. It’s eating city lunches right now. However, those who live in rural America are feeling the pain to an even greater degree.

A new study by Iowa State University found that day-to-day expenses consumed about 82% of rural American earnings in 2020. Most families had some discretionary spending that could be saved or used for unexpected expenses like an air conditioning unit failing or a vehicle breaking down.

The study found that just two short years later, expenses have risen 18.5% in 2022, while earnings increased a mere 6.1%. The net effect cut rural discretionary incomes by –49.1% between June 2020 and June 2022. Today, the expenses consume 91% of the take-home earnings of rural Americans.

Urban households were not affected that same as their post-tax incomes are higher. Therefore, their discretionary spending cushion was larger. Expenses did not rise at the same rate as in rural America, but at a slower 14.5%, and city earnings increased by 8.6%. As a result, the discretionary income cut was only 13.1%, leaving city folk a more significant chunk of operating funds.

The study investigated regions of the country and found differences in the northeast and Pacific Coast, where slower price gains and below-average inflation rates exist. However, the southeast and the west south central states face prices jumping 10.6% to 11% depending on the vicinity.

RNC Research posted on Twitter that two consecutive quarters of negative growth numbers equals a recession and pointed out that even the liberal, left-leaning media realizes it.

The Biden Administration and Joe Biden are sidestepping and passing the buck on the catastrophic current inflation and the reality of recession.

The president told Peter Dorsey of Fox News, “In my view, we’re not going into recession.”

White House Press Secretary Karine Jean-Pierre refused to define a recession from the press podium.

Also, the White House Economic Advisor, Brian Deese, blatantly denies that a recession is here or coming.

How is that? Examine the White House memo in the tweet below where the administration substantially changed the definition of a recession. The Gross Domestic Product plunging into negative numbers has no bearing on their meaning.

The Federal Reserve Bank of San Francisco provided a publication in 2007 explaining recessions and depressions. It reads in part:

“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief, and they have been rare in recent decades.”

The publication says that when the GDP falls if the fall is short-lived, it’s a recession. However, if it is lengthy, it’s depression. So, if the GDP declines over an extended period, it’s a recession. Unfortunately for Americans, the current administration is misinformed.