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👋Hi Friends,
J📆This Week’s Topic
This week we’ll be talking about affordability in the general lives of Americans. You’ve likely heard some form of comparison of how in the 80s groceries were so much cheaper. Experts even say that a middle-class American makes double that of a middle class American family in the 1960s. So why are many Americans’ finding it so difficult to live normal lives?
💳 Cause & Effect
When people talk about the cost of living being too expensive, one usually goes to the price of eggs, or more significant expenditures such as buying a house. Given, the prices of groceries have risen in the past; a gallon of milk, which in American stores cost $3 in 2019 now costs $4. This is the same in Europe, where food prices as well as energy prices have risen. On the other hand, wages on both sides of the income spectrum have risen, and inflation isn’t as high as it’s been in the past(sitting around 2%).
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📊 Statistics
In some places wages are rising, but assets and goods that we buy are as well. The wealth-to-GDP ratio is 6:1, with total household wealth sitting around $176T in 2025 compared to the $28T of GDP. This rise, from 5:1 in 2024, is fueled by the rising prices of assets such as homes and stocks (The AI boom has played a large part in boosting the stock market), and household wealth. And the wages that are rising aren’t enough to combat the amount of debt Americans have because they cannot pay for things such as school outright.
🔚 Outcome
Experts are saying it now costs around $140,000 to live a middle-class life in the US today, which it seems many would be . But for young Americans who don’t make that amount and aren’t accumulating wealth as fast, buying a house and having kids or starting a family isn’t an option.
⛱ Consumer Effect
For many young Americans, there are many burdens that stand in the way of saving money. To name a few, college loans, healthcare, stagnant wages, and housing costs can get in the way of saving money for a home, or for a family. The average salary for a young American in their twenties or thirties is anywhere from $40,000-$60,000, while the average cost for living equates to 80,000 annually (The location of where houses or apartments are can be a big factor in the yearly cost and living expenses.) Because there is such a gap between the pay and the reality of living, it is hard for people in their twenties or thirties to save up for a house, or start a family and have kids.
🏢Business Effect
And it’s nearly always possible to have kids. However, many would-be parents want to give their children a better life than they had. Jesse Iverson, a 28-year-old energy researcher said he remembers his anxiety as a child when his family could not buy gas for the car. “That’s affected me a lot in what to accept if I bring another person into this world,” says Iverson. According to a PEW Research Center study put out in 2023, 88% of parents want their kids to have a career they want and to be financially stable. With a nicer or more financially stable life comes additional opportunities, but today consumers aren’t able to pay fully, so they take on debt which reduces their ability to save.
⏳ Final Summary
It seems that parents want to give their kids a good life, but they cannot afford to start a family with the expenses of living today. While wages are rising, it’s not enough to counter the rising costs of everyday expenses, buying a house and starting a family. Young Americans want to live a middle class life, but it’s just too expensive.
🙏Thank You & Important Information
As always, thank you so much for reading this edition of Friday Finance. If you enjoyed what you read and would like to read more, consider subscribing to receive weekly updates on finance and more.
Best,
Grayson Stein and Jacob Gans
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