Mass Evictions and Foreclosures Loom
Crashing Real Wages and persistent Inflation squeeze Americans in a financial vise.
Retirees who live in the bucolic Paradise Village retirement community outside of San Diego, CA recently received shocking news. Their recurring bills for rent and other fees will reportedly vault higher by an astounding $1,000 or more per month. Prior to the increase, total costs per apartment started around $3,000 per month.
The local Fox affiliate interviewed a daughter of elderly residents who reacted with indignation: “I’m livid. I cannot believe someone would do this. My mom and her husband are 85 years old, on a fixed income.” The management company responded that the huge increases were compelled to “offset the rising cost of food, labor, and supplies.”
Unfortunately, this Paradise Valley story is hardly isolated. In fact, prepare for evictions and foreclosures to explode in America in the coming months as a toxic financial one-two punch of crashing real wages combines with sky-high inflation to force millions of Americans out of their homes.
A July survey from the Census Bureau, reported by Bloomberg News, found that a staggering “5.4 million households, or 40% of households that are not current on their rent or mortgage payments, said they were likely to be evicted or foreclosed on in the next two months.”
The confluence of severe economic pressures increasingly puts vulnerable citizens into a financial vise. On the income side of the ledger, Americans now endure 16 straight months of falling Real Wages, meaning pay adjusted for inflation. Even if paychecks tick higher, the added earnings cannot keep pace with prices for consumer staples galloping at 40 year record pace.
For example, the latest CPI report -- which the White House actually bragged about -- showed a blistering hot overall Consumer Price Index increase of 8.5%. Within that report, details showed food prices soaring at the hottest velocity since 1979.
Here is the chart depicting the plunge in Real Wages under Biden, reaching -3.02% in July:
Such a precipitous and sustained loss of real income crushes the actual buying power of all Americans, and especially working-class citizens who see their lifestyles decline measurably every single month. The weight of this destruction of prosperity compelled millions of workers to turn to the dangerous practice of loading up on high interest credit cards to cope with the inflation explosion. Total credit card debt in the Second Quarter of this year jumped $46 billion, the highest clip in 20 years.
That credit card debt becomes far more untenable with interest rates rising materially because of the Biden inflation surge. Concurrently, that massive ascent in interest rates also forces mortgage rates far higher than just months ago.
Here is a chart on 30-year mortgage rates going back 5 years, contrasting the President Trump years vs. the present Biden spike in rates: