Study: Housing costs for low-income renters up a crushing 50 percent since 90s
We all know that housing takes a significant bite out of most families’ budgets, but for some American households, that cost has risen to more than half their monthly income, according to a new analysis released today from The Pew Charitable Trusts, as incomes failed to keep up with costs.
“All households have less slack in their budgets, but the group feeling this pinch most acutely is the lowest income families,” according to Erin Currier, director of the financial security and mobility project, The Pew Charitable Trusts, who examined household income and expense data between 1996 and 2014 from the Bureau of Labor Statistics’ Consumer Expenditure Survey.
Overall, median household expenditures increased by about 25% between 1996 and 2014, after declining during the Great Recession, to then return to pre-recession levels. In 2014, the typical American household spent $36,800, according to Pew.
Consumer spending is certainly helping fuel economic growth with millennials and lower-income households, in particular shelling out more than older generations, according to analysis released this week by the J.P. Morgan Chase & Co. Institute. Consumers under 25 contributed almost half (1 percentage point) of a 2.3% gain in 15 U.S. metro areas in spending during December 2015 versus the previous year.
And while inflation remains historically low and many families have recovered since the Great Recession with gains in real estate and stock market values as well as the overall employment rate, individual households’ income has not risen as quickly as core living expenses have.“When you boil down that macroeconomic level to the individual household level it’s easy to see certain demographics have not recovered,” Currier says.
This budget squeeze is not only likely contributing to financial pressures families feel when facing a financial emergency or from a lack of emergency savings, but lower-income families have even less left over available to save than they used to. In 2004, the typical lower-income household had $1,500 of income remaining after expenses, but 10 years later, there was no surplus – they were $2,300 in the red.
“Financially vulnerable families really are spending their income on core needs, Currier says. “The data suggests they are becoming more vulnerable.”
Source: Forbes.com
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