Millions of people in the United States are struggling after years of worsening financial conditions, and it is time to reconsider how we approach affordability.

Understanding the Lasting Impact of Economic Shocks on Households

Public discussions often portray economic disruptions as brief setbacks—sudden changes in prices, jobs, or growth that resolve once the economy stabilizes. However, recent election outcomes indicate that many voters perceive these issues as more enduring. Candidates who prioritized affordability resonated with voters, likely because families are reacting to a prolonged decline in their financial well-being—one that persists long after the headlines fade.

Short-Term Turmoil vs. Long-Term Reality

For years, policy debates have operated under the assumption that enduring short-term hardship is justified if it leads to long-term stability. Policymakers may make minor adjustments, but the burden of coping with economic turbulence often falls on workers, small business owners, job seekers, and caregivers. While aggregate statistics suggest these shocks are temporary, the reality for households is far more complex. Recognizing the gap between economic indicators and the lived experiences of families is crucial for crafting policies that genuinely enhance affordability.

Why Headline Numbers Miss the Mark

While national statistics capture the broad effects of economic shocks, improvements in these figures don’t always translate to better household finances. Most families don’t track the thousands of items in the Consumer Price Index (CPI); instead, they focus on a handful of essential expenses like rent, groceries, childcare, and utilities. When the cost of groceries rises by $40 a week, that becomes the new normal for their budget.

Even if market forces eventually bring some prices down, costs rarely return to previous levels, and wages often lag behind. A rent hike doesn’t automatically reverse when inflation slows, and childcare costs may remain high even as overall price growth moderates. These increases in essential expenses typically become permanent, raising the baseline for every future financial decision families make.

Persistent Price Increases and Their Consequences

Recent spikes in prices highlight how uncommon true reversals are. For instance, the CPI for food shows that while price growth slowed after the 2022 surge, prices did not return to pre-spike levels. Milk prices briefly dropped from $4.20 per gallon in January 2023 to $3.86 by May 2024, but settled around $4.00 by August. By November 2025, consumers were paying 25% more for groceries than in 2019. Egg prices followed a similar pattern, remaining about twice as high as before inflation by September 2025.

The housing market offers little relief. According to the Zillow Observed Rent Index (ZORI), rents soared over 15% in 2021. Although the pace of increases slowed between 2022 and 2025, rents never fell back to 2019 levels; instead, they continued rising from a much higher starting point. The end of an inflation shock doesn’t restore affordability—it simply marks a return to typical price growth, but from a steeper baseline.

Long-Term Setbacks from Temporary Shocks

Even when a shock subsides, the financial damage can linger for years. A temporary loss of purchasing power may force families to take on debt or delay saving for major goals like college or retirement—impacts that aren’t reflected in current economic indicators. Thus, what appears as a one-off event at the macro level can permanently alter a household’s financial trajectory.

Why Voters Prioritize Affordability

This helps explain why voters gravitate toward candidates focused on affordability. They aren’t necessarily dismissing long-term solutions; rather, they’re responding to a reality shaped by years of accumulating, irreversible shocks—none of which are fully captured by headline statistics.

Policy Implications: No Such Thing as a “One-Time” Shock

For policymakers, the lesson is clear: for families, economic shocks rarely disappear after they leave the charts. Even when national data normalizes, communities may continue to struggle if local employers have downsized or if reduced spending leads to lasting slowdowns.

The Disconnect Between Recovery and Reality

From a macroeconomic viewpoint, disruptions often seem fleeting. Unemployment eventually dropped after the 2008 crisis, GDP rebounded post-2020 lockdowns, and inflation slowed as supply chains recovered. Yet, this narrative overlooks the persistent challenges households face. In 2021, many families reported surviving the COVID downturn by tapping into savings, taking on debt, or delaying retirement. By 2023, as inflation replaced the slowdown, consumers again relied on savings to cover rising grocery costs—with nearly 20% using funds not intended for daily expenses.

Aggregate data fails to reveal how much ground families lost, how long recovery will take, or if it’s even possible. This is a major oversight, as standard metrics were never designed to capture the compounding, lasting effects of household-level shocks.

Structural Cost Increases Outpacing Wages

Research from the Ludwig Institute for Shared Economic Prosperity (LISEP) and others highlights the growing gap between essential costs and wages. When inflation surged in 2021, many dismissed it as a temporary issue, but for countless families, the squeeze had been building for years. From 2001 to 2023, for a typical family of four:

• Rent: 40th percentile rents increased by 125%.
• Healthcare: Annual health insurance premiums for middle-income workers more than tripled.
• Childcare: The average cost of center-based childcare doubled.
• Wages: Median wages rose only 92% in nominal terms, resulting in a 4% drop in purchasing power for families whose budgets are dominated by necessities.

These are not minor fluctuations—they represent deep, ongoing increases in the cost of essentials, compounded by wage growth that hasn’t kept up. By the time inflation hit groceries and consumer goods in 2021, many families had little financial cushion left.

The Limitations of Headline Inflation

Focusing solely on headline inflation overlooks the broader, ongoing threat. Essential expenses have been climbing for decades, while the CPI often understates these increases and labor statistics overestimate the prevalence of living-wage jobs. Higher barriers to homeownership and education make the financial outlook even tougher. Consumer behavior reflects this: new tariffs in 2025, described as temporary, are projected by Yale University’s Budget Lab to raise prices by about 1.7% and cost the average household $2,300 in a single year. Even if these costs eventually recede, they hit families already under strain, and many no longer expect prices to fall back—they’ve been disappointed too often.

According to a recent survey, 44% of respondents believe tariffs have already increased prices, and 25% have switched to generic or private-label goods as a result. These choices suggest households aren’t expecting a quick return to pre-shock conditions.

New Shocks on an Already Stretched Foundation

In this context, new disruptions—whether from technological change, federal layoffs, or trade policy shifts—are likely to hit families who are already financially vulnerable. Even well-meaning policies can have unintended negative effects if they don’t consider the realities of household budgets. Addressing only short-term affordability or focusing solely on long-term reforms misses the point; families must juggle both immediate and future needs simultaneously.

The Need for Structural Change

After more than twenty years of declining financial security for most low- and middle-income families, it’s clear that comprehensive reforms are needed to realign costs with wages. Short-term solutions alone won’t solve the underlying problems and may even make things worse if poorly designed. Effective leadership requires recognizing that working families need both immediate relief and policies that foster long-term stability.

Redefining Policy Success

Ultimately, economic policy should be evaluated not just by overall economic performance or political popularity, but by its ability to strengthen the financial resilience of households across all income levels—helping families advance in good times and avoid lasting setbacks during downturns. Until our measurement tools reflect these realities, policymakers will continue to rely on short-term thinking and intuition rather than solid evidence.

While gut feelings and biases may influence elections, truly effective policy—and the nation’s well-being—demands a more accurate approach: one that acknowledges that for most families, very few economic shocks are ever truly “one-time” events.