Affordability, Part III
What should a serious policy agenda include?
Source: Conference Board via Haver Analytics
Americans are in a deep funk over the state of the economy. The chart above shows consumer confidence as estimated by The Conference Board from January 2022 to the end of October 2025. Early 2022 marked the beginning of the worst period of post-Covid inflation. Since then inflation has fallen dramatically -- from 9 percent in June 2022 to 3 percent now. But consumer sentiment fell sharply in late 2024, rose a bit during the summer, and is now falling sharply again. If one word can summarize Americans’ economic anxiety, it is “affordability.”
This is the third primer in a series on affordability. It was intended to be the last, but as I’ve discovered, there is so much to the topic that there will be a fourth installment next week. Much of the public’s concern about affordability stems from the simple fact that prices are considerably higher than they were 5 years ago. But that simple view obscures some important and subtle factors. In the first installment I discussed reasons why Americans are anxious about affordability even though conventional economic measures (such as real wages) indicate that most Americans’ purchasing power is higher now than it was before the pandemic. I also covered why conventional economic measures of purchasing power are probably deficient in capturing people’s economic reality.
In the second installment I argued that perceptions of affordability are shaped by considerations that go beyond purchasing power: economic inclusion, economic security, and perceptions of fairness.
In this third installment I will sketch out elements of a policy agenda to address Americans’ affordability concerns. Realistically, this can only be a Democratic agenda because Donald Trump and the MAGA Republicans refuse to acknowledge that there is a problem. In his Tuesday speech, the kick-off event of his “Affordability Tour”, Trump declared that affordability is a “hoax” and that “prices are coming down very substantially.” On Thursday Republicans in Congress flatly rejected a proposal to extend federal subsidies for health insurance, which would have averted a severe shock to affordability that will hit tens of millions of Americans at the end of this month. And anyone who protests this denial, like Marjorie Taylor Greene, quickly finds a target on their backs. In lockstep with Trump, the G.O.P. is in denial over Americans’ affordability concerns.
So this raises the question: What can and should Democrats promise to do to address affordability?
Beyond the paywall I’ll address the following:
1. What policy can’t do: During the 2024 campaign Trump promised to bring the overall level of prices way down; now he’s falsely claiming that he is in fact doing so. In reality, overall prices can’t be reduced substantially, and it would be a big mistake to try.
2. Undoing Trump’s damage: Policy can’t achieve a large decline in overall prices. It can, however, limit and in some cases reduce individual prices. To an important extent this can be achieved simply by reversing destructive Trump policies.
3. Beyond Trump: Much of an effective affordability agenda can consist simply of ending Trump’s destructive policies. But there’s still a lot more that can and should be done.
This will be a sketch, not a detailed policy manifesto. The broad message is that we should accept the things we can’t change — prices are not going back to 2019 levels — but try to change the many things we can in ways that are positive for the American people.
And in the fourth and final entry in this series I’ll get into issues that go beyond prices and real wages: Social inclusion, economic security and fairness.
