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INFORMATIONAL MEMO <br />Page 4 <br />Increased <br />Government <br />Spending <br />1980: The federal government ran steadily increasing deficits since <br />the early 1970's due increased spending for the Vietnam War, <br />domestic spending was increased, and taxes were cut. <br />2022: The Federal Government had increased spending in response <br />to the Covid-19 Pandemic that began in 2020 and spurred an influx <br />of cash into the economy for business and consumer recovery. <br />(Source: US Bureau of Labor Statistics article "100 Years of Price Change: the Consumer Price Index and <br />the American Inflation Experience" and Federal Reserve reports including the July 2022 "Beige Book.") <br />Then vs. Now Inflation: 1980 and 2022 <br />The two highest periods of United States inflation since the Civil War occurred in the early <br />1980's and 2022. The negative economic impacts on Washington State residents, <br />businesses, manufacturers, medical care, and local governments are significant. The <br />leading inflationary factors were similar for 1980 and 2022, however, the timelines, <br />historical significance, and policymaker methodologies leading up to each period differs. <br />Higher prices from inflation reduces the value of wages and savings which leaves <br />households, usually low- and middle-class households, with less spending power. <br />Inflation impacts people differently based upon geography, population, income, <br />government, housing, employment, and business sales and profits. <br />Cost of Living <br />The American dollar had an average inflation rate of 2.92% per year between 1981 and <br />now, which resulted in a cumulative price increase of 225.97%. $1 in 1981 is $3.26 today. <br />18.0% <br />16.0% <br />14.0% <br />12.0% <br />10.0% <br />8.0% <br />6.0% <br />4.0% <br />2.0% <br />0.0% <br />-2.0% <br />CPI -W urban wage earners and clerical workers, not <br />seasonally adjusted (NSA) <br />O N V CO CO 0 N V CO CO 0 N <br />CO CO CO CO CO N. N. N. N. N. CO CO <br />O) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) <br />111111111111111111 <br />V CO CO O N V CO CO O N V CO CO ` O N V CO CO 0 <br />CO CO CO O) O) O) O) O) O O O O O N <br />0) 0) 0) 0) 0) 0) 0) 0) 0 0 0 0 0 0 0 0 0 0 0 <br />NNNNNNNNNNN <br />U.S. % change year -over -year <br />Seattle MSA % change year -over -year <br />Cost of Living is the amount of money needed to sustain a certain lifestyle in a given <br />place. The price of goods and services varies geographically, so it's a useful calculation <br />