Low and middle-income households spent about 7% more in 2021 than in 2020 or 2019 amid rising inflation, according to the Penn Wharton Model Budget. Per household they spent about $3500 more in 2021 for the same products raising the specter of rising poverty in 2022.
“This is not a crisis of scarcity. It’s a crisis of everyone having more than what the market can currently supply,” Samuel Hammond, director of poverty and welfare policy at the Niskanen Center, told CNBC.
With President Joe Biden’s Build Back Better stalled in the senate due to the opposition of Senator Joe Manchin and benefits due to run out in 2022 the spike in inflation could hit poor families especially hard in the first months of the next year, potentially adding 3 million people to those living in poverty.
“What they happen to be buying has been hit harder by the supply crunch,” Kent Smetters, Director of the Penn Wharton Model told CNBC. “It’s broader-based than in the past.”
Democrats have vowed to continue trying to get the Build Back better bill through the Senate in spring.