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How 'out-of-control costs' are hurting Americans fueling the affordability crisis · THE DAILY BRIEF

• 0:00
  Speaker 1: All right, here with my good friend Caleb Silver and
• 0:03
  Speaker 1: he's the editor in chief at Investipedia, the chief business
• 0:06
  Speaker 1: editor with people in Investipedia recently came out with a
• 0:09
  Speaker 1: list of the most searched words of the year.
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  Speaker 2: Top ward this year affordability. All right, no surprise there.
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  Speaker 1: So it's time to visit our hypothetical friend, Betty, who
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  Speaker 1: is a working mother of a high schooler named Bobby.
• 0:20
  Speaker 2: All right, let's start with housing costs. It's a big deal.
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  Speaker 1: Betty's rent on their two bedroom unit actually fell one
• 0:26
  Speaker 1: point seven percent from last year, which is good in
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  Speaker 1: the short term, but she wants to buy a home now.
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  Speaker 1: The median price for an existing home in America was
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  Speaker 1: four hundred and fifteen thousand dollars in October.
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  Speaker 2: It sounds like a lot to you.
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  Speaker 1: It is because it was two hundred and seventy one
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  Speaker 1: thousand five years ago.
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  Speaker 3: Yeah, home prices have appreciated like no other costs already
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  Speaker 3: in America, and it's very hard to get in to
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  Speaker 3: that first home. You got high mortgage rates, you have
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  Speaker 3: high prices in general, very difficult, and now housing prices,
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  Speaker 3: the amount we spend on living is now over thirty
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  Speaker 3: three percent of our annual budget.
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  Speaker 2: That's more than I have a refugether.
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  Speaker 1: For a long time, we used to say that it
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  Speaker 1: shouldn't be more than thirty percent. Now you're saying it's
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  Speaker 1: at least.
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  Speaker 2: At least thirty percent, more like thirty five percent.
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  Speaker 1: Right in some high income places or high expense places
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  Speaker 1: like New York, it's upward of forty fifty. Some people
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  Speaker 1: reported paying sixty percent. So this is crippling for people.
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  Speaker 3: Yeah, and you've got higher taxes in some places as well.
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  Speaker 3: You got competition for rents now because nobody's selling their
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  Speaker 3: home or moving out of their own. Housing is one
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  Speaker 3: of the most aggressive costs that people are facing.
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  Speaker 1: Okay, another thing that homeowners face, or even renter's face.
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  Speaker 1: Even though Betty may have saved some money on rent,
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  Speaker 1: those savings.
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  Speaker 2: Are going to her electricity bill.
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  Speaker 1: Now, not all states are suffering equally, and Caleb's going
• 1:35
  Speaker 1: to tell us about why. But in Massachusetts, where Betty lives,
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  Speaker 1: her energy bill is up an average of ten.
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  Speaker 2: Percent since twenty eighteen. What's going on with electricity?
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  Speaker 3: Yeah, well, you have the demand from the data centers
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  Speaker 3: now that we're building all over the country AI for
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  Speaker 3: AI that's driving up electricity prices in general. You have
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  Speaker 3: seasonal shifts. Of course, as we go into win or
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  Speaker 3: we use more electricity. So that's another price that consumers
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  Speaker 3: don't have a lot of control. It is whatever the
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  Speaker 3: market price is it at, and you're going to pay
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  Speaker 3: that bill no matter what.
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  Speaker 1: I hope you're invested in the stock market, you're making
• 2:02
  Speaker 1: money off of AI because it's costing you whether you
• 2:04
  Speaker 1: use AI or not.
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  Speaker 2: Let's take a look at healthcare costs. Billy, Bobby Thry.
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  Speaker 1: Betty and Bobby get their health insurance through the ACA,
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  Speaker 1: the Affordable Care Act. Those subsidies, as we've discussed a lot,
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  Speaker 1: were increased during the pandemic in twenty twenty one, and
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  Speaker 1: they really helped keep her health insurance costs down. But
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  Speaker 1: as you know, Congress has failed to extend those subsidies.
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  Speaker 1: So on January first, Betty's premiums are set to more
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  Speaker 1: than double.
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  Speaker 2: This is not hypothetical, not hypothetical, this is very real.
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  Speaker 3: By January fifteenth, if there is no deal struck and
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  Speaker 3: there is a room for a deal still, we have
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  Speaker 3: a few weeks, we could see premiums double for some families,
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  Speaker 3: triple in some states for some people if they're buying
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  Speaker 3: it off the marketplace.
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  Speaker 1: There.
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  Speaker 3: So, healthcare costs is one of those out of control
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  Speaker 3: costs and that consumers have no control over.
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  Speaker 2: And it's not a need an app it's not a one.
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  Speaker 3: It's an absolute need.
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  Speaker 1: But it's one of those things that for most we've
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  Speaker 1: often thought that your housing is your biggest cost.
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  Speaker 2: Right.
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  Speaker 1: For some people, if there is no deal arrived at,
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  Speaker 1: their healthcare may exceed their cost of housing.
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  Speaker 3: Yeah, and we're hearing from places like Kaiser Permanada and
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  Speaker 3: Kaiser Family Foundation that some families are going without insurance
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  Speaker 3: because they're afraid of these rising costs. They can't predict
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  Speaker 3: what's going to happen. They're just going without insurance going
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  Speaker 3: into the new year. That's very dangerous. That could be
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  Speaker 3: financially quickling.
• 3:14
  Speaker 1: All right, let's talk we talk about food a little
• 3:16
  Speaker 1: while ago. Let's let's talk.
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  Speaker 2: About food costs. Food costs of all food.
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  Speaker 1: Costs about seventeen point nine percent, eighteen percent more than
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  Speaker 1: it did. Let's compare it to January of twenty twenty two.
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  Speaker 1: That means a grocery bill that cost one hundred dollars
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  Speaker 1: in January of twenty twenty two will now cost you about.
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  Speaker 2: One hundred and eighteen dollars.
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  Speaker 1: That's a problem for Betty because not so little Bobby,
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  Speaker 1: who's growing made the varsity football team this year.
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  Speaker 2: He's bulking up. He needs to eat.
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  Speaker 3: Yeah, when you have kids, get protein costs, Beacon, general,
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  Speaker 3: chicken in general. You know this if you're shopping every
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  Speaker 3: week and feeding your family. Those almost doubled in the
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  Speaker 3: last two two three years. But to be fair, some
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  Speaker 3: prices have actually come down. Coco prices down forty three percent,
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  Speaker 3: sugar prices down thirty percent.
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  Speaker 2: Why is that?
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  Speaker 3: Golp one for one.
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  Speaker 2: But also these are also.
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  Speaker 3: Affected by markets around the world. So the President was
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  Speaker 3: talking about egg prices coming down. They have, but we
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  Speaker 3: did have an avian flu about a year and a
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  Speaker 3: half ago that shot those prices up. It has nothing
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  Speaker 3: to do with the government. Has everything to do is
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  Speaker 3: supply demand and where these foods are grown.
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  Speaker 1: Where are you in your research on the effect that
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  Speaker 1: the tariffs are having on inflation. Inflation is about two
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  Speaker 1: point seven percent right now. The Fed would like it
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  Speaker 1: to be about two percent. What role is our terrists playing?
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  Speaker 3: Well, you could see it in some aisles of the
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  Speaker 3: grocery store, for sure, especially in produce. But when you
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  Speaker 3: look in places what you thought you might see it,
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  Speaker 3: like terariffs, I mean like apparel for example, shoes and clothing,
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  Speaker 3: you're not seeing it as much there. Some of that
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  Speaker 3: is because of discounting by the retailers. Now it's holiday
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  Speaker 3: shopping season, we're going to spend over one point one
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  Speaker 3: trillion dollars because we're really good at that as American consumers.
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  Speaker 3: A lot of those prices have been discounted. And as
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  Speaker 3: you noticed, and a lot of people noticed, a lot
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  Speaker 3: of the sales were pushed back into September and October.
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  Speaker 3: A lot of people did their shopping earlier because they
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  Speaker 3: were worried about higher prices. So they have a psychological
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  Speaker 3: effect and they have a real effect on numbers in
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  Speaker 3: the economy.
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  Speaker 2: Are people don't.
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  Speaker 1: INVESTI Pedia and looking up case shaped economy because we've
• 5:01
  Speaker 1: been talking about this FED chair was talking about it
• 5:03
  Speaker 1: that if you're invested in property or money the stock market,
• 5:07
  Speaker 1: your economy looks like this a plus plus plus plus plus.
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  Speaker 1: If you're not, your economy looks a little bit more
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  Speaker 1: like this.
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  Speaker 3: And that's the case shape. Yeah, that's the case shape.
• 5:15
  Speaker 3: The top the K is doing just fine. Stock market
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  Speaker 3: are going to end the year at or near record
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  Speaker 3: highs right now. You talked about real estate prices at
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  Speaker 3: or near record heis. There's a record amount of four
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  Speaker 3: to one k million is out there. Those that own assets,
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  Speaker 3: especially stocks and property have done very well, and that
• 5:29
  Speaker 3: is the only way to get to that next level
• 5:32
  Speaker 3: if you're earning the media and income right now, is
• 5:33
  Speaker 3: by investing and owning assets. And it's super hard, as
• 5:36
  Speaker 3: we've demonstrated, for people to get into those KELP, thanks
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  Speaker 3: as always.
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  Speaker 1: KELB Silver is the chief business editor at People, Inc.
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  Speaker 1: And the editor in chief at Investipedia.