Moody’s Analytics’ Mark Zandi on the driver behind the affordability crisis

Economic Outlook - Consumer spending shows resilience, but hides significant disparities between income groups [2][3] - Real consumer spending is growing at approximately 2% [3] - Spending by the bottom 80% of the income distribution has barely kept pace with inflation since the pandemic [4] - All spending growth is concentrated in the top 20% of income earners [5] Affordability Crisis - An affordability crisis is driven by higher prices for essential goods and services [6] - Acceleration in inflation and weakening job market since the beginning of the year exacerbate the crisis [7] Policy Impact - Tariffs and immigration policies contribute to the current economic challenges [7] - Rolling back tariffs on everyday items is a potential policy response [8] - Without policy changes at the beginning of the year, inflation was projected to return to the Federal Reserve's target by year-end [10] Potential Solutions - Cutting back on tariffs and rethinking immigration policy are the quickest ways to restore affordability [11] - Addressing issues in housing, healthcare, education, childcare, and eldercare are important but take longer to implement [12]