The annual costs of owning a New Home & Car have Soared
The kitchen table is where the American dream is built. In a good economy, a couple can buy a home, purchase a car once every decade and help their kids pay for college. Every month, families gather there to pay their bills and plan for the future.
But in the past four years, runaway inflation has made it increasingly difficult for families to make ends meet.Since the Biden-Harris administration took office, Consumer Prices in U.S. cities have risen 26% faster than private-sector wages. Paychecks now buy less than they did in January 2021.
During the four years Donald Trump was in office, inflation-adjusted private-sector wages rose by 8.1%. That means real private-sector wages today are effectively 11.8% lower than they would have been if the Trump-era economy had continued for another four years.
Yet the inflation rate greatly understates the “bundling” effect of higher prices.
- A new car today costs $47,870 versus $40,857 in January 2021 – and,
- the total annual cost to operate that car has soared.
- The interest rate on an average new car today is more than 8%,
- compared with about 5% in January 2021,
- increasing the cost of a 60-month loan by $726 a year.
- The average annual auto insurance policy cost $1,567 in 2021,
- by the end of 2024, it’s expected to hit $2,469.
A family in 2021 paid on average $11,579 to own a new car and cover its associated costs for the year; today, doing so costs $15,337 a year:
- The car price rose 17%, but
- its total annual costs – financing, insurance, and gasoline – rose 32%.
Home ownership is where families have suffered from the Biden-Harris inflation the most.- The average home cost $303,900 in January 2021.
- In August, the cost hit $416,700.
- But with mortgage rates recently at 6.45% versus 2.75% in January 2021, the total cost of buying and financing a home has more than doubled – from $14,928 to $31,404 a year.
- Homeowner’s insurance that cost $1,966 annually in 2021 costs $2,499 today.
- The average annual electric bill was $1,464 in 2021. Today it is $1,868.
- The average annual natural-gas utility bill was $761 in 2021 but now is $965.
- The cost of owning and living in a home rose from $19,119 a year in 2021 to $36,736 today.
That $21,375 exceeds the annual in-state tuition for any public university in Florida or Texas. Given S&P 500 performance, that money annually invested over four years could provide more than $550,000 for retirement in 20 years.
Families are still burdened by the Biden-Harris inflation. A decade of good economic policy will likely needed to overcome the failures of the current administration.
America needs to restrain spending, enforce work requirements in welfare, stop illegal immigration, reduce regulatory burdens and let working families keep more of their income to build their dreams at kitchen tables across America.
Senators Ted Cruz and Rick Scott, both Republicans, represent the great states of Texas and Florida respectively in the U.S. Senate.
