America has faced incredible division and turmoil in the past years. Not only did COVID rock the world, but the largest European escalation of a conflict since 1945 in the Russian-Ukrainian war has continued to impact the world.

Whether it be the supply chain problems, the unemployment crisis, food and gas shortages, or foreign tariffs, global crises continue to affect the US in 2023. As PA students prepare to enter the workforce and become independent adults, it’s essential for them to remain mindful of their economic surroundings. So, what sort of state is the economy in right now?

Nationally

A shaky one. 

Costs continue to rise, “inflation increased significantly in the US in late 2021 and early 2022, reaching levels higher than at any time in the last 40 years,” says John W. Diamond, Director of the Center for Public Finance at the Baker Institute, “A couple of smaller increases are expected in 2023.” However, the inflation rate has begun to slow in the first months of 2023.

On top of the inflation rate, the national cost of food stays stubbornly high, at a rate of around 10 percent higher than last year, a pain point for Americans. The causes of this food price increase can be traced back to Ukraine and the resulting shortage of grain and fertilizer, the avian flu, and climate-related disasters, on top of the many other minor sources.

There is also talk of an upcoming debt ceiling crisis. The debt ceiling is the amount of money that the federal government is allowed to borrow to meet its legal requirements, raising it allows the government to further finance things that it has already paid for. The federal government is projected to reach this limit by June 1, exceeding $31 trillion in debt. Republican representatives, headed by Kevin McCarthy, stay in a standoff with their Democratic counterparts, saying that they won’t raise the debt ceiling until Democrats agree to federal spending cuts. 

If the debt ceiling is not raised it could cause a deep economic catastrophe, initiating a recession, quadrupling unemployment rates, severely downgrading the credit of the dollar, “irreparably harming,” small-and-medium-sized businesses says Joe Brusuelas, nicknamed the “chief economist to the middle market.”

State

The cost of living has become a point of debate within the state government. Both Republicans and Democrats believe that there is a cost of living crisis, but similar to many other problems that the state faces, they are unable to come to a consensus on how to solve it. 

Representing the Republican leadership of Virginia, Governor Glenn Youngkin said in his 2023 State of the Commonwealth address “The writing on the wall couldn’t be more simple: The people of Virginia are overtaxed.” He believes in income benefits, that cutting the tax rates of corporations (6% to 5%) and higher tax brackets will give more money back to the Virginian people.  While introducing a bill in the Virginia House of Delegates, Republican lawmaker Joe McNamara, representative of the 8th district which includes Roanoke County, hopes that creating a low-cost environment will “bring more businesses to the state and, by extension, more jobs for people who might otherwise leave for opportunities elsewhere.”

On the other hand, Democratic representatives have proposed spending measures hoping to reduce the cost of living for low-to-middle-income families, such as a state child tax credit and upper limits on rents. Democrat Jane McClellan, representative of Virginia’s 4th Congressional district in the United States House of Representatives commented that “we should be investing in our families and our children, and rather than putting money in the hands of big corporations and the wealthy, we need to put it back in the pockets of Virginians who need it most.” Despite this, the bills have faced opposition from Republicans and are struggling to be approved.

Local

A main problem locally in the Hampton Roads area is the affordable housing crisis which has plagued mid to low-income families, especially since the pandemic. “At $11 per hour, a minimum wage worker would have to clock 78 hours per week to afford a one-bedroom apartment in Virginia,” says the National Low Income Housing Coalition. They say that because of the high price of rent in Hampton Roads, poorer households are more likely to “sacrifice other necessities like healthy food and healthcare to pay the rent.” 348 people in Virginia Beach are currently experiencing homelessness, up from 243 in 2018. 

The housing market has been on the verge of a minor downturn. The housing stock is too low for the current demand that homebuyers create, creating a competitive market, and increasing house prices. 

But this rise in prices appears to be cooling off, economists predict that house prices could begin to decrease, down to 5-10% in the coming year or so. However, as with everything economic, it is to be seen if this happens, especially considering the current market instability throughout all of America.

Works Cited