Let Them Eat Aggregates

T here are lots of great things about the American economy right now. Business investment is extremely strong with the AI infrastructure buildout. America’s top industry is now in a capital-intensive phase of its development. Unemployment is low at 4.2 percent, and it has been stable. The market is up; the AI rally is driving household wealth and spending. Q2 GDP was revised up to 2.2 percent from 1.5 percent. Consumer spending is up 3.8 percent. The aggregates, when read aloud, look reassuring.

But the economy feels frozen to individuals who depend on wages — most of us.

I can’t ever keep those aggregate figures in my head for long, because I am a human being living in history. And therefore I want to throw up every time I fill up our car’s gas tank (over $80 now) or when I see the total at the end of a grocery shop. Motor fuel is up 27.9 percent over the year. Grocery prices are relatively stable recently, but they are 42 percent above early 2020. Restaurant prices are even worse.

The usual ways Americans adjust to the squeeze involve switching jobs, moving to a better metro area, or trading up or down. You work hard and get a raise. A normal promotion amounts to a 10 to 15 percent bump. If you are living in a house with a $400,000 mortgage you took out in 2019 or 2020 for 3 percent, it works out to about $1,686 a month in principal and interest. According to Freddie Mac, though, the 40-year rate hit 7.28 percent last week, up from 6.34 percent a year ago. The same loan at 7.28 percent costs $2,737 a month. That’s an increase of 62 percent.

But that doesn’t really capture the whole struggle for people who are trying to work hard and move up. The national medium price rise on homes from 2020 to now is 59 percent. That means an equivalent loan in 2026 for the same house would be $636,000 at that higher interest rate. Meaning a $4,352 monthly payout to cover principal and interest. The same house at the same share of income would require a household needing two and half to three times their 2020 income. Most people aren’t getting raises of 100 percent. And that’s not even what most people would be facing — people who are changing jobs and climbing up will be moving to growing metros where nominal house prices may be up 80–90 percent or more since 2020.

Besides leaving young people who missed the train on real estate inflation feeling as if they missed the last chopper out of Nam, this means that people who did everything right and bought into the market when it was more affordable are not incentivized to find better opportunities in new areas, because they feel they are currently sitting on a windfall of good luck, and changing house now would be an economic tsunami.

Because everyone spends his money as he sees fit, complaints about the current state of affairs will express themselves in a stunning variety of ways. Some people who economize on food spend a lot on entertainment; some who spend a lot on food fix items in their house themselves, rather than hire it out to tradesmen.

Earlier this year, Turning Point USA spokesman Andrew Kolvet posted that one of his college students said a burrito shouldn’t cost $20. This kicked off a flurry of controversy. Why was the burrito $20? Were you ordering it from DoorDash? Joel Berry of the Babylon Bee posted that his wife could make burritos for a whole family for less than half the price. Marc Thiessen of AEI argued that when he was in college he economized and didn’t whine about it. Ben Shapiro said that a $20 burrito, if you weren’t rich, meant that you were doing life wrong.

It was a stunning reprise of the Jimmy Carter years. While energy prices soared, and then controls led to supply shocks, President Carter advised Americans to turn down their thermostats to 55 degrees at night. He also suggested carpooling. The main line of conservative attack was that Carter’s policies were failing and that he was effectively criticizing the spending habits of American people instead. Neoconservative Irving Kristol argued that Carter was preaching austerity because the new class of regulators and intellectuals was comfortable telling others to live with less. In other words, Carter was telling people they were doing life wrong and should move their lifestyles back to a lower standard of living.

I agree with the old neoconservatives. When the people are telling you that they believe prices are a political problem and have political causes, they don’t want political figures to change the subject to home economics and learning to live with less. Let their parents, pastors, or financial advisers tell them how to economize.

In a normal election, the president is not entirely responsible for gas prices. But this time, it’s different. The resumption of the war with Iran early this year was predicated on the belief that a satisfying result would be achieved very quickly with minimal disruption. Instead, we’ve had what others long predicted — a fight over the Strait of Hormuz that has led directly to energy shocks. In an American economy where everything is shipped on trucks, that means price hikes.

The administration itself is divided. Donald Trump has called “affordability” a hoax. Meanwhile, JD Vance last week said it was “tone-deaf Republicans” telling people to shut up if they’re angry about a $20 burrito.

Vance is right, of course. People can navigate away from expensive or delivered burritos. But right now, only the most heroic earners and asset owners can outpace the rises in home prices, grocery prices, and interest rates. Prices are being driven upward by policy, not by our sometimes-prodigious appetites and cravings for guacamole.