Author: Jeremy Horpedahl

Groceries in November 2025 are the Most Affordable They Have Ever Been

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In surveys more than two-thirds of Americans say they are are struggling with the cost of groceries. And yet, relative to average wages:

The chart shows a simple measure of relative grocery affordability. Starting with the levels of wages and grocery prices in 1947, if in any year wages increase more than prices, the line goes up (it can also go down, as it does in some years). Cumulatively, you can see that today groceries are over twice as affordable as in 1947.

You could reasonably complain that there hasn’t been much progress since the early 1970s. Fair enough. But there has been significant progress since the 1990s. Even if the progress is less than we would have liked, groceries are still, right now, the most affordable they have ever been in the US relative to average wages. And since US consumers spend by far the lowest share of their income on groceries in the world, we might be tempted to say that right now groceries in the US are the most affordable they have ever been in human history. Period.

This is not just a trick of using average wages, which can be distorted by outliers. First, we are already using an average wage series that strips out the highest earners (supervisors, managers, etc.). But we can show this more clearly by using a median-wage series, such as the CPS series (calculated by EPI) starting in 1973. Notice this affordability trend gets slightly better if we use median wages from 1973-2024:

It’s true that using the median wage series, 2020 and 2021 look more affordable than 2024 — but that’s because the compositional effects of the job losses in the pandemic really throw off the median wage. But the growth rate since 1973 is slightly better for median rather than average wages — it’s not a trick! And when we have the median wage data for 2025, it will also likely be the most affordable measure on this chart.

So why are people so pessimistic if wages have been rising faster than grocery prices? One theory: availability bias. People focus on the prices where they notice goods becoming less affordable, but ignore the ones that are more affordable. Many consumers could probably tell you that a dozen eggs increased from $1.40 per dozen in November 2019 to $2.86 today, and at times was much higher, topping $6 briefly in early 2025. Likewise they could tell you that a pound of ground beef soared from $3.81 in late 2019 to $6.54 today. Both of these prices increases vastly exceed wage increases over the same timeframe (about 33 percent for wages), but most consumers probably couldn’t tell you that these were outliers and most major categories of food increased by less than average wages since late 2019:

While the “beef and veal” category has clearly outpaced wages — by almost twice as much! — nearly every other category of meat and as well as other food product prices increased less than wages. Poultry is the one exception, though here it is almost equal to wage increases. But if we are talking about pork or fish, or the non-meat categories, most food is more affordable than in late 2019 relative to wages. Consumers won’t as easily identify these more affordable categories, and they probably have no idea how much average wages increased.

Job Market Data is Back! Did All Job Growth Go to Native-Born Americans in the Private Sector?

Jeremy Horpedahl2 Comments

BLS is slowly (actually, it probably feels very quick for those working on it!) catching up on data releases that were delayed during the federal government shutdown. This week, we saw the release of the November jobs report, which also includes data from October, even though there was no separate release for October. Well, kinda.

For the household survey (which is used to calculate the unemployment rate, among many other measures of the labor market), there is no October report. Because there is no data to be collected. Look at Table A in the employment situation report, and you will see no data in the column for October 2025. Look at the FRED page for the unemployment rate, and you will notice a gap in October. As I wrote a few weeks ago, this is not the end of the world, but it is rather sad for a gap to show up in a series that consistently ran for 933 months back to 1948.

So what is in the jobs report? Lots of new information. A few related areas that have gotten a lot of attention this week are the changes in federal government employment vs. private sector employment, and the changes in native-born vs. foreign-born employment.

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Poverty Lines Are Hard to Define, But Wherever You Set Them Americans Are Moving Up (And The “Valley of Death” is Less Important Than You Think)

Jeremy Horpedahl8 Comments

Last week I wrote a fairly long post in response to an essay by Michael Green. His essay attempted to redefine the poverty line in the US, by his favored calculation up to $140,000 for a family of four. That $140,000 number caught fire, being covered across not only social media and blogs, but in prominent places such as CNN and the Washington Post. That $140,000 number was key to all of the headlines. It grabbed attention and it got attention. So it’s useful to devote another post this week to the topic.

And Mr. Green has written a follow-up post, so we have something new to respond to. Mr. Green has also said a lot of things on Twitter, but Twitter can be a place for testing out ideas, so I will mostly stick to what he posted on Substack as his complete thoughts. I am also called out by name in his Part 2 post, so that’s another reason to respond (even though he did not respond directly to anything I said).

Once again, I’ll have 3 areas of contention with Mr. Green:

  1. As with last week, I maintain that $140,000 is way too high for a poverty line representing the US as a whole (and Mr. Green seems to agree with this now, even though $140,000 was the headline in all of the major media coverage)
  2. There are already existing alternative measures of what he is trying to grasp (people above the official poverty line but still struggling), such as United Way’s ALICE, or using a higher threshold of the poverty rate (Census has a 200% multiple we can easily access)
  3. His idea of the “Valley of Death” is already well-covered by existing analyses of Effective Marginal Tax Rates, and tax and benefit cliffs. This isn’t to say that more attention is warranted, but Mr. Green doesn’t need to start his analysis from scratch. And this “Valley” is probably narrower than he thinks.
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The Poverty Line is Not $140,000

Jeremy Horpedahl39 Comments

UPDATE: Michael Green has written a follow-up post which essentially agrees that $140,000 is not a good national poverty line, but he still has concerns. I have written a new response to his post.

A recent essay by Michael W. Green makes a very bold claim that the poverty line should not be where it is currently set — about $31,200 for a family of four — but should be much higher. He suggests somewhere around $140,000. The essay was originally posted on his Substack, but has now gone somewhat viral and has been reposted at the Free Press. (Note: that actual poverty threshold for a family of four with two kids is $31,812 — a minor difference from Mr. Green’s figure, so not worth dwelling on much, but this is a constant frustration in his essay: he rarely tells us where his numbers come from.)

I think there are at least three major errors Mr. Green makes in the essay:

  1. He drastically underestimates how much income American families have.
  2. He drastically overstates how much spending is necessary to support a family, because he uses average spending figures and treats them as minimum amounts.
  3. He obsesses over the Official Poverty Measure, since it was originally based on the cost of food in the 1960s, and ignores that Census already has a new poverty measure which takes into account food, shelter, clothing, and utility costs: the Supplement Poverty Measure.

I won’t go into great detail about the Official Poverty Measure, as I would recommend you read Scott Winship on this topic. Needless to say, today the OPM (or some multiple of it) is primarily used today for anti-poverty program qualification, not to actually measure how well families are doing today. If we really bumped the Poverty Line about to $140,000, tons of Americans would now qualify for things like Medicaid, SNAP, and federal housing assistance. Does Mr. Green really want 2/3 of Americans to qualify for these programs? I doubt it. Instead, he seems to be interested in measuring how well-off American families are today. So am I.

Let’s dive into the numbers.

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The Return of Data

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Tomorrow, the Bureau of Labor Statistics is set to release the first major report of economic data that was delayed by the federal government shutdown: the September 2025 employment situation report. It’s good that we will get that information, but notice that we’re now in the middle of November and we’re just now learning what the unemployment rate was in the middle of September — 2 months ago (you can see their evolving updated release calendar at this link). This is less than ideal for many reasons, including that the Federal Reserve is trying to make policy decisions with a limited amount of the normal data.

What about the October 2025 unemployment rate? Early indications from the White House are that we just will never know that number. Why? Because the data likely wasn’t collected, due to the federal government shutdown. There was some confusion about this recently, with many people asking why they don’t just release it. Well, that’s because they can’t release what they don’t collect: the unemployment rate comes from the Current Population Survey, a joint effort of the BLS and Census where they interview 60,000 households every month. The survey was not done in October. It would not be impossible to do this retroactively, but the data would be of lower quality and, again, quite delayed. That gap in a series that goes back to 1948 wouldn’t be the end of the world, but it is symbolic of the disfunction of our current political moment.

What about GDP? We are now over half way through the 4th quarter of the year, and… we still don’t know what happened with GDP in the third quarter of 2025. BEA is in the process of revised their release calendar too, but they haven’t yet told us when 3rd quarter GDP will be released. In this case, the data was likely collected, but there is a certain amount of processing that needs to be done. Sure, we have estimates from places like the Atlanta Fed’s GDPNow model, but the trouble is… many of the inputs it uses are government data which haven’t been released yet for the last month of the quarter.

Eventually, all will mostly be well and back to normal, even if there are a few monthly gaps in some data series. The temporary data darkness may be coming to an end soon, but I fear it will not be the last time this happens.

The Growth of Family Income Isn’t Primarily Explained by the Rise of Dual-Income Families

Jeremy Horpedahl7 Comments

Alex Tabarrok was kind enough to share a chart of mine showing that one-third of families in the US have incomes greater than $150,000. This is a massive increase since the 1960s, or even since the 1980s.

In addition to questions about inflation adjustments and general disbelief, one of the more common questions about this data is how much of it is driven by rising dual-income families, where both the husband and wife work (for purposes of this post, I will look only at opposite-sex couples, since going back to the 1960s this is the only way we can really make consistent comparisons).

In short: most of the growth of high-income families can not be explained by the rise of dual-income families. The basic reason is that the growth in dual-income families had mostly already occurred by the 1980s or 1990s (depending on the measure). So the tremendous growth since about 1990, when just about 15 percent of families were above $150,000 (in 2024 dollars), is better explained by rising prosperity, not a trick of more earners.

You can see this in a number of ways. First, here is the share of married couples where both spouses are working. I have presented the data including all married couples (blue line), as well as only married couples with some earners (gold line), since the aging of the population is biasing the blue-line downwards over time.

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The Supreme Court Case on Trump’s Tariffs

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Today is a big day not only for Supreme Court watchers, but for everyone following economic policy: the Court will hear oral arguments for the case Learning Resources, Inc. v. Trump. The case concerns whether Trump’s tariffs imposed under the International Emergency Economic Powers Act are legal, which includes the famous “Liberation Day” tariffs from April 2025.

You should be able to livestream the arguments from the SCOTUS website starting at 10am ET (though it may start a little later). SCOTUS blog has a liveblog which should cover most of the legal arguments, but if you want to follow the economic arguments there are several people you can follow on Twitter, such as Scott Lincicome and Phil Magness (you can follow me too).

Bad Claims About Food Stamps (SNAP)

Jeremy Horpedahl11 Comments

One of the likely effects of the federal government shutdown is that recipients of SNAP benefits (what used to be officially called “food stamps,” a term still used by the general public, especially those that dislike the program) may lose their benefits next month. This would obviously be a hardship for those that depend on this program, but it has also led to bad claims being made about the program, from both supporters and opponents of the program.

Let’s start from the political right: Matt Walsh makes the claim that by subsidizing food consumption “obviously drives up the cost” of groceries.

As with all bad claims, there is a nugget of truth baked into them. If the government subsidizes anything, we would expect demand to increase, and thus unless supply is perfectly elastic, there will be some effect on prices. However, we need to think more carefully about the nature of the subsidy.

The way SNAP works is that beneficiaries receive an electronic voucher to spend at the grocery store, which is about $300 per month on average for a household. That $300 must be spent on groceries. However, if that household had already planned to spend $300 or more on groceries, it is unlikely they will spend all of the additional $300 on food. In the limit, it’s entirely possible they will spend no additional money on groceries, merely reducing their out-of-pocket spending on groceries by $300. They will then effectively have $300 more to spend on other goods. More likely is that they will spend some of the additional $300 on groceries, and some of it on other goods.

Many studies have tried to look at the extent to which SNAP benefits affect household spending, but these were mostly observational studies. There was no treatment and control group. But a 2009 paper titled “Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program” has a better approach to studying the question. Since the original Food Stamp program was slowly rolled out across the country over more than a decade, you can compare counties that entered the program first to counties that entered it later. By doing so, Hilary Hoynes and Diane Schanzenbach find out some first interesting things about the causal effects of SNAP benefits.

For the claim by Walsh in his Tweet, the most relevant result from the paper is that food stamps impact household spending similarly to a cash transfer. Yes, the program increases household spending on groceries, but it also increases spending on other goods and services. And it does so almost identically to how cash transfers impact household spending. In other words, while pitching the program as assistance for buying groceries may make it more politically palatable, SNAP benefits are no different from a similarly-sized cash transfer for the average recipient. If they do cause any inflation, they do so in the same way as a cash transfer would, and thus there is no specific impact on food inflation.

A second bad claim about SNAP comes from the political left, in this case Minnesota Governor Tim Walz:

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An Engineer in 1910 Didn’t Earn $450,000

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Inflation adjusting income and prices from the past is a common theme in my blog posts, including fact checking of other attempts to do these adjustments. But here is a really novel one, in a viral post from Facebook (which comes from this essay), which claims that a civil engineer earned the equivalent of $450,000 in today’s terms:

Can this be correct? If so, it would represent massive stagnation in incomes over time. Thankfully, there are two major errors, or at least misleading aspects to the calculation.

  1. The listed salary was not one of an “ordinary man” — far from it.
  2. Using gold prices to inflation adjust the incomes is very misleading.

First, the salary: $3,000 per year was definitely not what ordinary men earned. The average wage, for example, for a production worker in manufacturing was 18 cents per hour. You would need to work almost 17,000 hours to earn $3,000 at that wage, which of course is not possible. In reality, the average worker put in 57 hours per week — which means they earned about $500 if they were able to work 50 weeks per year (most probably didn’t). So already we see that the civil engineer working on the Panama Canal is making about 6 times as much as an “ordinary man.” Agricultural workers, the other main industry of 1910, earned about $28 per month ($22 if they also received board) — even less than manufacturing, and only about 1/10 of the engineer

Second, the gold price adjustment is misleading. Yes, in 1910, gold was how we defined currency in the US. But you can’t eat gold, and most people only keep a little gold on hand that can be described as providing services for them (such as jewelry). What people really wanted were real goods and services, and mostly goods. Around 1910, the average American household spent about 40% of their income on food, 23% on housing, and 15% on clothing. Comparing standards of living over time requires us to look at what people spend their money on, not what the currency is denominated in. And that’s what a good consumer price index does: it compares the prices of all consumer spending at different points in time, not just one thing like gold, allowing us to make rough comparisons of income over time.

Using the Measuring Worth historical CPI (which extends the BLS CPI back before 1913), we see that the index was 9.21 in 1910, and it stands at 323.364 in August 2025. So the 18-cent manufacturing wage from 1910 is roughly equivalent to $6.32 in current dollars. The average manufacturing wage today? Around $29. And of course, workers today have a whole range of fringe benefits, worth roughly another $13.58 for private sector workers. This means that an “ordinary man” today working in manufacturing can buy 5-7 times as many real goods and services as his 1910 counterpart for each hour he works. And the work is, of course, much safer today: BLS reports 23,000 industrial deaths in 1913 (61 deaths per 100,000 workers), but only 391 manufacturing deaths in 2023 (0.003 deaths per 100,000 workers).

But what about that extraordinary man in 1910, the civil engineer? How was he doing compared with today? Using the same historical CPI, we can see that $3,000 in 1910 is roughly equivalent to $105,000 today. Not bad! That’s almost exactly the median pay for civil engineers today. But keep in mind the civil engineer working in Panama was an unusually highly paid position. A 1913 report from the American Society of Civil Engineers suggests that most early career civil engineers were making closer to $1,500 per year — half of the Panama engineer. Engineers were also a highly skilled, very rare profession in 1910. And don’t forget that about 10% of the American workers on the Canal died in the construction, mostly from disease so the engineers were probably just as susceptible to death as the laborers.

Finally, we might ask a different question: what if you had held onto gold since 1910? Let’s say your great-great grandfather was a civil engineer, and managed over the course of a few years to save one year’s salary in gold. He even managed to hide it during the 1930s-1970s, when private holding of gold was generally illegal in the US.

How much would that 150 ounces of gold be worth today? That answer is simple: about $615,000 today (gold has gone up a bit just since that calculation was done in May!). But was that a good investment? Not really. A $3,000 investment in the stock market from 1910 to 2024 would be worth about… $120 million (it’s actually a bit more than that, since the market continued to rise after January 2024). Of course, that would have required a bit of active management, since index funds don’t come along until much later. But your great-great grandfather would have been much wiser to set up a trust for you and have it actively managed to approximate the entire US stock market, rather than to bury 150 ounces of gold in his backyard.

Even assuming you lost half the value to management fees, the stock portfolio today would be worth at least 100 times as much as the gold.