The Big Apple Groans Under High Prices

When the Euro finally replaced the Deutsche Mark (DM) more than six years ago I had already been living in New York for quite a while. Yet I still remember well the headlines in the Bild Zeitung about the “Teuro” (trans. note: Teuro is a play on words in German signifying the Euro was expensive; when the conversion came, one Euro cost customers about DM 1.96). I remember, too, my mother’s complaints: “What used to cost a Mark now costs almost a Euro but people aren’t earning any more than before.”

Not only have gasoline and diesel prices gone sharply higher in the last year . . .

Back then I could only comprehend all this with difficulty. There was no inflation in America. Under Bill Clinton’s presidency (1993 to 2001) prices remained stable while incomes made solid gains. Americans had it better and better every year.

But that’s ancient history. George W. Bush’s tax and fiscal policies as well as his foreign policy have turned the USA into the world’s champion debtor nation (almost 10 trillion dollars owed) and also helped catapult oil prices (now 130 dollars a barrel) to levels that were laughingly considered Armageddon theories just a short time ago. Concurrently, the dollar has nose dived (1.58 Euro = 1.00 Dollar) so badly that its rank as the key international currency is endangered.

Result: everything is becoming more expensive. It started with imported products like olive oil and wine. Meanwhile, it has become groceries in general, electrical power, home heating, rents. Everything.

Until about a year ago, Americans didn’t react much. They hoped it was just a fleeting crisis. But now they’re complaining just as the Germans did years earlier. Not only that everything is getting more expensive: average incomes actually fell for the first time since the end of World War Two.

New Yorkers have to dig deeper in their pockets even at the corner diner

Big cities like New York are especially hard hit by the price increases. The newspaper “New York Post” has been running a series they call “Inflation Nation.” CNN and other TV networks have programs with similar names.

Here are a few examples taken from the daily life of Gary Foodim, 37, his wife and their two children Jackson, 4, and Samantha, 3 years old. A typical average family in New York whose cost of living rose about $1,000 per month from April 2007 to April 2008.

Grocery bill: $890 compared to $530 (a 68% increase!)

Itemized:

• Bananas up from $0.59/lb to $0.69/lb (+17%)

• Turkey breast up from $7.99/lb to $9.49/lb (+19%)

• Orange Juice, 1 quart up from $3.29 to $3.59 (+9%)

• Yogurt up from $0.66 to $0.99 (+50%)

• Six-pack of beer (Corona or Heineken) up from $6.99 to $8.99 (+27%)

• Milk, 1 gallon up from $3.88 to $4.00 (+18%)

• Whole Wheat Bread up from $4.50 to $5.50 (+22%)

Telephone bill up 7% from $58 to $62

Laundry: up from $128 to $157 (+23%)

Entertainment: (movies, zoo visits, eating out, etc.) up from $595 to $871 (+46%)

Wine: up from $113 to $313 (+177%)

Add to this higher prices for air conditioning, water, subway fares (monthly pass up from $76 to $81) and bridge and tunnel fees (whoever travels by car in or out of Manhattan pays between $5 and $6.50).

Still, the Foodlims have it relatively good because they don’t need a car in Manhattan so are spared the fuel costs. Currently a gallon of gasoline in New York costs $4.25. One year ago it was around $3.00 and before George Bush took office it was as low as $1.20.

One thing is clear: before the November elections, Democrats will be hammering these figures home to the voters. Then voters will ask themselves the same question Republican Ronald Reagan asked long ago: is America better off now than it was eight years ago? And whoever is elected to sit in the White House will have to ask “How does America escape from this circle of rising prices and falling incomes?”