What’s Really Eating the Family Budget?

Friday, 28 Sep 2012 08:07 AM

By John Morgan

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While recent news coverage pinpoints cellphones as the culprit eroding the family budget, The Atlantic reports the real pressure on the family budget is still being exerted by the same old goods and services as for the last 30 years — housing, healthcare and education.

Although household phone spending is up 10 percent since the recession and phone services are rising 5 percent yearly even while median incomes have stagnated, the typical U.S. family is spending $910 more on food, rent and medical insurance annually than it did in 2007, according to Labor Department data used by The Atlantic, while only spending $116 more on telephone services.

Medical insurance spending has risen the most, about 25 percent, during that time period. Rent spending has increased about 20 percent (although mortgage payments are actually down), and education spending has increased more than 12 percent.

Editor's Note:
Startling Proof of the End of America’s Middle Class. Details in the Video


At the other end of the household-spending spectrum, The Atlantic reported, vehicle spending is down about 18 percent since 2007, home furnishing spending has declined more than 16 percent and entertainment spending is down nearly 10 percent.

Goods and services that must be produced and consumed locally have tended to become more expensive over the past few decades. Healthcare and education are both localized, and it is likewise hard to imagine a more local “good” than a home.

Meanwhile, the Labor Department reported the cost of living in the United States rose 0.6 percent in August, the most in more than three years.

Excluding food and fuel costs, the core index rose 0.1 percent for a second month.

Editor's Note:
Startling Proof of the End of America’s Middle Class. Details in the Video

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