A Concerning Trend? The Purchasing Power of the Consumer Dollar Continues to Decline.

In March of 2024 the FRED released the Consumer Price Index for All Urban Consumers: Purchasing Power of the Consumer Dollar in U.S. City Average. In my analysis the data shows a decline trend. The data below shows the steep decline from 1965 to current. As of March 2024, the index falls at 32.0 which has been the lowest ever since the FRED have collected this data. 

A Whipping Effect to the Housing Market:

The effects of the CPI purchasing power can be felt in the housing market. According to (Wolak, 2024) “Year over year, affordability decreased by approximately 5.3%” (p.1). In the same article, home prices have become staggeringly expensive in the states and, as a result, have kept pace with household income.  According to (Wolak, 2024), “Median household income has increased 3.7% since March 2023, and 90.2% since January 2000. Real house prices are 42.5% higher than in January 2000” (p.1). The decline in purchasing power reflected in the Consumer Price Index can significantly impact the housing market. With housing prices becoming increasingly expensive and outpacing household income, affordability decreases, making it more difficult for individuals and families to purchase homes. This can lead to a decrease in homeownership rates and potentially contribute to a rise in rental demand.

There are several factors that have impacted the wallets of many Americans, including student loans and the credit card crisis, which was written about in prior newsletter volumes. Greenpoint Knowledge Venture LLC empowers our clients to make strategic decisions through education and assessment.

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Works Cited:

U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers: Purchasing Power of the Consumer Dollar in U.S. City Average [CUUR0000SA0R], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/CUUR0000SA0R, April 26, 2024.

Wolak, Sarah. “First American: Housing Market Nearly Overvalued Nationally.” National Mortgage Professional, 29 Apr. 2024, nationalmortgageprofessional.com/news/first-american-housing-market-nearly-overvalued-nationally.