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Six Figures and Still Broke: Inflation or Corporate Greed? · Common Sense - Red State Finance

• 0:00
  [upbeat music] From Red State Finance, this is Common Sense, the news, the money, and the nonsense explained for people who think. Here are your hosts, Cole and Savannah.
• 0:15
  In 2006, a mom walked into Walmart, bought 79 items, and paid $161.87. 79 items. I spent $160 last week and came home with chicken, coffee, and one sad bag of grapes.
• 0:32
  Her daughter found that receipt and posted it this year. 12 million people looked at it. In the same cart today? Well over $400. Meanwhile, the government says prices are up about 65% since then. So who's lying?
• 0:47
  The receipt or Washington? Today, on Common Sense, Washington's new press secretary gets her first reviews, and Kelly Clarkson gets snubbed over a $15,000 bird.
• 1:00
  Then, why one in five families is behind on a bill, and plenty of them make six figures. The Walmart receipt and the McDonald's menu that broke the internet.
• 1:10
  Is it really inflation, or did corporate America just find a great excuse? And what you can actually do about it this week. Stick around. [upbeat music] All right. Welcome to Common Sense from Red State Finance.
• 1:26
  Not left, not right. Just over it. I'm Savannah. I'm Cole. Before we get to the money stuff, a quick lap around the news. Washington has a brand new White House press secretary. Katie Zacharia.
• 1:39
  She took over for Karoline Leavitt, did her first briefing on Tuesday, and, well, the internet had opinions. The internet always has opinions. The briefing lasted 14 minutes.
• 1:50
  Three outlets got questions, and then she wrapped it up because the president was heading out to Marine One. 14 minutes. Some folks online called it awkward.
• 2:00
  The president said he thought she was very good, and the White House communications director called it a tremendous start. So depending on who you ask, it was either a rough start or a triumph.
• 2:11
  Which is pretty much every review of anything in Washington. Look, it's your first week at a new job on live TV with the whole press corps staring at you.
• 2:21
  I'd be happy to get through 14 minutes without knocking over my coffee. Fair. Let's give her more than one briefing before we all decide. Agreed.
• 2:30
  Meanwhile, Kelly Clarkson is in an internet fight over a $15,000 mechanical bird. I'm sorry, a what? A mechanical bird. Its name is Molly.
• 2:41
  She says she walked into a shop in Brooklyn, asked about it, and the guy looked at her like she couldn't afford it and offered to find her something comparable. A full Pretty Woman moment. Big mistake. Huge.
• 2:53
  And honestly, that's a pretty good way into today's show, because these days, plenty of people who look like they can afford it, can't. Oh, look at you with the transition. I've been practicing.
• 3:04
  [upbeat music] Okay, so Savannah, Wednesday morning, the September inflation number came out, 3.7%, hotter than expected. Of course it was. Gas went up, so everything went up.
• 3:19
  But here's the number I can't stop thinking about. Last Friday, the Federal Reserve put out its big survey of consumer finances. They only do it every three years. The fancy one. The fancy one.
• 3:31
  Almost 20% of American families said they were behind on a loan payment. Back in 2022, it was about 12%. So we went from one in eight to one in five. One in five.
• 3:44
  And the Fed says that's the highest it's been since the 2010 survey, right after the financial crisis. Okay, but let me guess. That's people who don't make much money, right?
• 3:55
  That's what I assumed, and then Goldman Sachs put out its retirement survey. People 45 to 75. More than a third of households making over $500,000 a year said they're living paycheck to paycheck. 500,000.
• 4:11
  Cole, paycheck to paycheck on half a million dollars. 36.6%. And for households making 100 to 200,000, about 22% said the same thing. Now, to be fair, some of that is the boat payment and the lake house. Totally fair.
• 4:28
  Goldman says a lot of it at the top is lifestyle creep. It's people describing how they feel, not an audit of their bank account. But the point stands. A six-figure income used to mean you'd made it.
• 4:41
  Now, it means you can afford the stuff you need, and you're still nervous about the stuff you don't. [upbeat music] And this is the part that gets me. Smart Asset ran the numbers this year.
• 4:53
  In 40 states, a family of four with two working parents needs at least $200,000 a year to live comfortably. Two working parents, 200 grand, just to be comfortable. Not rich, comfortable.
• 5:07
  Paying the bills, putting a little away, the occasional vacation. My grandparents raised four kids on one paycheck. Grandpa worked at the plant. Grandma stayed home. They had a house, a station wagon, and a boat. A boat.
• 5:22
  A small boat, but a boat. Now you need two paychecks and a side hustle just to rent the house and keep the car. And buying a house?
• 5:30
  The National Association of Realtors says the typical first-time buyer is now 40 years old, a record. 40. So you buy your first house, and two years later, you're buying reading glasses.
• 5:43
  And the 30-year mortgage is sitting around 7.4%. Okay, so everybody's squeezed. But here's what I wanna know. Is this all just inflation?
• 5:53
  Because the official number says prices went up a little, and my receipts say prices went up a lot. [upbeat music]Let's do the receipts. Back to that Walmart receipt from 2006.
• 6:06
  A news station in Louisiana actually priced some of the items at Walmart today. Okay, hit me. A 20-ounce Coke, $1.18 back then, about $2.48 now. So more than double. Post cereal, $1.86. Now around $4.97.
• 6:23
  That's almost triple. For cereal. The box doesn't even get bigger. If anything, it gets smaller. And that whole 79 item cart, 162 bucks. They figure it's well over 400 today. That's roughly 150%.
• 6:39
  And the official inflation number over the same 20 years? About 65%. So the receipt says 150, the government says 65. Now, honesty check. Not everything went crazy.
• 6:52
  A 10 pound bag of potatoes went from $3.96 to about $4.54, and package sizes have changed, so it's not a perfect comparison. Fine. The potatoes behaved, the potatoes can stay. But then there's McDonald's. Oh, no.
• 7:07
  [upbeat music] Finance Buzz compared McDonald's prices from 2014 to 2024. The McChicken. Remember the dollar menu? The dollar McChicken was a food group in college. A dollar in 2014, $2.99 in 2024.
• 7:25
  A McDouble went from $1.19 to $3.19. Medium fries, $1.59 to $3.79. And a Quarter Pounder with cheese meal went from $5.39 to $11.99. $12 for a Quarter Pounder meal. I can get a steak for that.
• 7:43
  Well, I used to be able to get a steak for that. On average, the 10 items they tracked doubled, 100%, and regular inflation over that decade was 31%.
• 7:54
  So the stuff we actually buy went up over 100%, and we're being told it's 30. That's the feeling, right? And that's what made this go viral. People holding up their receipts and going, "I am not crazy."
• 8:08
  Okay, quick break before I start yelling about chicken sandwiches. If you've got a family member who complains about prices every single Thanksgiving, our shop has a shirt for that. Not left, not right, just over it.
• 8:21
  Links in the show notes. Buy two. Prices are going up. Too soon, Cole. [upbeat music] So here's the big question. Is it inflation, or is it corporate greed? I want to say greed, but I wanna be fair to everybody first.
• 8:37
  Okay. McDonald's side first. They pushed back hard. Their US president wrote an open letter saying the average Big Mac went from $4.39 in 2019 to $5.29. 21%, not 100. Different years, though.
• 8:53
  That's 2019, not 2014. Right. And they said what it cost to run a restaurant went way up. Crew pay up about 40% since 2019. Food and paper up about 35. And they said restaurant margins were about the same as before.
• 9:09
  Okay, that's a real argument. Workers got raises, and beef isn't cheap. But here's the other side. Reuters pointed out McDonald's profits were up roughly a third since 2019. Huh. And then what happened?
• 9:23
  Customers stopped showing up, and suddenly $5 meal deals, value menus. This year they rolled out an under $3 menu. Wait, so when we stopped buying, the prices came down. Some of them did, which tells you something.
• 9:39
  A lot of those prices weren't just costs. Some of it was what people would put up with. It wasn't the cost of beef, it was the cost of us not complaining. [upbeat music] And it's not just burgers.
• 9:52
  The Federal Trade Commission looked at grocery stores. In 2023, grocery retailers were bringing in about 7% more than their total costs. Their previous peak was 5.6 back in 2015.
• 10:05
  So their costs went up, but their prices went up more. That's what the FTC suggested. And one think tank, Groundwork, estimated corporate profits drove 53% of price growth in the middle of 2023.
• 10:19
  Historically, it's more like 11. Okay. That's a big number. But I can hear somebody yelling at their dashboard right now. And they've got a point. Groundwork leans left.
• 10:30
  An economist at the Richmond Fed looked at it a different way and found that companies padding their markups explained only a small part of inflation. So what's the rest? The usual suspects. Washington spent trillions.
• 10:43
  The Fed kept money cheap for years. Tariffs. And this year, the war with Iran sent oil over $100 and diesel over six bucks a gallon, and everything at the store rides on a diesel truck.
• 10:56
  So both parties spent the money, the Fed printed it, and companies saw everybody distracted and went, "Hey, while we're at it..." That's about the size of it. Inflation opened the door.
• 11:06
  A lot of companies walked right through it. And by the way, the S&P 500 just posted its highest profit margin on record. 17% last quarter, per Fact Set. Record profits and one in five families behind on a bill.
• 11:21
  Both things are true at the same time. Not left, not right. Just over it. [upbeat music] Okay, so what do you actually do with this? Because yelling at a receipt doesn't lower the bill. Trust me, I've tried.
• 11:37
  Number one, look at the unit price, not the sticker. That little price per ounce on the shelf tag, that's where they hide the shrinking box. Two, store brands. A lot of times it's the same factory, different label.
• 11:51
  Three, vote with your wallet. McDonald's just proved it. When people stopped paying $12 for a burger meal, the deals came back. Use the apps, use the value menus, and walk away when it's ridiculous.
• 12:04
  Four, if you're behind on anything, write down every debt and attack the highest interest rate first. Credit cards are charging over 20%. That's the fire. And five, and this is the one nobody likes hearing.
• 12:19
  A lot of families now need more than one income stream, not because they did anything wrong, because the math changed. That's the show.
• 12:28
  And if today got you thinking about a second paycheck, there's a guide for that in the vault. It's called 18 Side Hustles That Could Cover Your Mortgage. Link's in the description, along with the free newsletter.
• 12:39
  Go check your receipts, and then go check your bank statements. And maybe skip the Quarter Pounder this week. Never. We'll see you next time. [upbeat music] You've been listening to Common Sense from Red State Finance.
• 12:54
  If this made you think, share it with one person who needs to hear it. Get the free Common Sense newsletter at redstatefinance.com.
• 13:02
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• 13:15
  Common Sense, for people who think.