We can afford the things we don’t need, but we need the things we can’t afford.
For many Americans today, that shiny new flat-screen TV is now more within reach financially than it’s ever been. But it has become harder to afford the house to put it in, food to eat in front of it, or the medical care to ensure you’ll outlive its extended warranty.
Here’s an interesting chart from Mark Perry of the American Enterprise Institute showing data from the Bureau of Labor Statistics.
The chart shows that since 1996, the prices of food and housing have increased by close to 60 percent, faster than the pace of inflation. Costs of health care and child care have more than doubled. The prices of textbooks and higher education nearly tripled.
In this World Economic Forum article, Perry explains how
Prices rise when [health care and college] markets are not competitive and not exposed to global competition, and prices rise when easy credit is available.
Whether the 20-year trajectory in the chart above is sustainable is another question entirely.