American families aren’t imagining it: we’ve had affordability problems since at least 2022.
asserted
we → imagine → 2022
The situation was improving markedly throughout last year, right up until this February, but overseas conflicts reversed some of that progress.
asserted
conflicts → improve → progress
Once the wars with Iran and in Ukraine conclude, affordability will start to improve again.
asserted
affordability → conclude → Ukraine
The cost-of-living crisis started during the Biden administration when prices rose so much faster than earnings that people’s paychecks shrunk in terms of their purchasing power.
asserted
paychecks → start → power
Although the average American’s weekly paycheck grew roughly 17% during President Joe Biden’s term, it bought about 4% less.
asserted
it → grow → %
For many families, that meant canceling vacation plans or being unable to buy a newer vehicle.
asserted
that → mean → vehicle
For others, it meant having to put some necessities — like rent, prescriptions and food — on credit cards.
asserted
it → mean → cards
Even when inflation came down, families were still facing high costs since inflation is the rate of price increases, not the prices themselves.
asserted
inflation → come → increases
To add insult to injury, 40-year-high inflation prompted the fastest rise in interest rates in just as long.
asserted
inflation → add → rates
Not only did prices rise rapidly, but so did borrowing costs.
asserted
costs → rise → ?
That was a deadly one-two punch for homeownership affordability as higher home prices and mortgage interest rates combined to double the monthly payment on a median-priced home in just four years.
asserted
prices → combine → years
But affordability was improving after January 2025.
asserted
affordability → improve → January
Real (inflation-adjusted) weekly paychecks rose roughly 2% on average from January 2025 through February of this year.
asserted
paychecks → adjust → year
While not a windfall, it was still good progress and reversed half the cumulative losses from the Biden years as income growth outpaced inflation.
asserted
growth → reverse → inflation
Tax and regulatory reform, along with sound energy policy, were spurring economic activity and wage growth while keeping inflation down.
asserted
reform → spur → inflation
Then the Iran war broke out.
asserted
war → break → ?
Global energy markets specifically and supply chains broadly were severely disrupted, causing costs to skyrocket.
asserted
costs → disrupt → ?
Oil prices quickly rose from $60 or $70 per barrel, depending on the market, to $100 or $120.
asserted
prices → rise → 100
Prices at the pump soon followed, but the energy shock is spilling over to more sectors of the economy with each passing day.
asserted
shock → follow → day
Energy is an input cost in every product and service consumers buy.
asserted
consumers → buy → product
Food at the grocery store was grown with diesel-powered tractors and fertilizer synthesized from natural gas.
asserted
Food → grow → gas
It was transported to the store on a truck, and maybe a train too, fueled by diesel.
asserted
It → transport → diesel
Prices for everything from airfares to plastics to manufactured goods are up because of the energy shock.
asserted
Prices → manufacture → shock
Homeownership affordability hit a three-year high in February and, while still relatively low, marked a significant improvement from the record low in the Biden years.
asserted
affordability → hit → years
However, it’s fallen each month since then to the lowest level since July 2024 as interest rates ramped up.
asserted
rates → fall → July
When fuel supplies began falling, energy prices rose, and that in turn drove inflation expectations higher.
asserted
that → begin → expectations
Interest rates followed as lenders demanded a higher return for the anticipated inflation.
asserted
lenders → follow → inflation
Ukrainian strikes on Russian energy infrastructure have exacerbated the shortage of oil and petroleum products, especially diesel.
asserted
strikes → exacerbate → oil
However, unlike the runaway inflation that peaked in 2022 at an annual rate exceeding 9%, today’s higher prices are not from the government devaluing the currency by spending, borrowing and creating too much money.
asserted
government → peak → money
Rather, this is an energy shock that is causing countless prices to rise.
asserted
prices → cause → ?
The difference in causation means there’s a different solution and a better outlook too.
asserted
difference → mean → causation
The affordability crisis was easing significantly until the energy shocks hit and those shocks came from overseas.
asserted
shocks → ease → ?
Investment is booming, the manufacturing sector is expanding at the fastest pace in at least four years, the private sector is adding jobs, AI is fueling productivity growth and earnings are still growing.
asserted
earnings → boom → growth
Once the conflicts overseas are resolved, energy markets will begin to normalize and costs will start declining.
asserted
costs → resolve → ?
Then the economy will be firing on all cylinders.
asserted
economy → fire → cylinders
Just as higher energy prices are pushing up costs everywhere else, so will lower energy prices put downward pressure on consumer staples everywhere.
asserted
prices → push → staples
Likewise, inflation expectations will fall, dragging interest rates back down and improving homeownership affordability.
asserted
expectations → fall → affordability
Falling prices and rising earnings mean more breathing room for families.
asserted
prices → fall → families
None of this will happen overnight because supply chains take time to heal, but it’s crystal clear that once peace returns, affordability will follow.
asserted
affordability → happen → time
The Aporia
