It Was the Housing Crisis Epicenter. Now the Sun Belt Is an Inflation Vanguard.
A.J. Frank watched the Phoenix real estate market and its entire economy implode as he was graduating from high school in 2009, a scarring experience that has made him a cautious saver. He is again living through a major economic upheaval as the cost of living climbs sharply.Phoenix — among the hardest-hit cities during the housing crisis — is now on the leading edge of another painful economic trend as the United States faces the most rapid inflation in 40 years. The city is experiencing some of the fastest price increases in the nation, something Mr. Frank has felt firsthand.His landlord tried to raise his rent nearly 30 percent this year, prompting him to move. Mr. Frank, a 31-year-old engineer, is still paying $250 a month more than he was previously, and rising grocery and gas bills have reduced his disposable income.“It’s always traditionally been a pretty affordable city to live in, but it’s getting more expensive,” Mr. Frank said of Phoenix.While inflation has been rising quickly across the country, it is especially intense in Sun Belt cities like Phoenix, Atlanta, Miami and Tampa, which have experienced price increases well above 10 percent this year, much higher than the national rate of 8.5 percent in July. Prices in the Southern United States have risen 9.4 percent over the past year, the fastest pace of any large region in the nation and more rapid than in the Northeast, where prices are up 7.3 percent.Inflation Is Fastest in the SouthPrices have been increasing rapidly in cities including Atlanta, Tampa and Miami, even as Northeastern inflation has been more moderate.
.dw-chart-subhed {
line-height: 1;
margin-bottom: 6px;
font-family: nyt-franklin;
color: #121212;
font-size: 15px;
font-weight: 700;
}
Price Increase from Year Earlier
Source: Bureau of Labor StatisticsBy The New York TimesPart of the divide can be traced to fuel and electricity costs, which surged earlier this year. Because many Sun Belt cities depend on cars and air-conditioning, those purchases make up a larger percentage of consumer budgets in the region. And, just as it did in 2008, housing is playing a crucial role — this time, through the rental market, which is a major contributor to overall inflation. In Phoenix, rents are up 21 percent from a year ago, and in Miami, they are up about 14 percent. For urban dwellers nationally, rent is up only about half as much, 6.3 percent.The Sun Belt’s intense bout of inflation matters for several reasons. While inflation is painful everywhere, it is having a disproportionate impact on families in cities like Tampa Bay, where prices have shot up faster than in areas like New York City. Demand at food banks and for eviction counselors has jumped across the region, providers said, as signs of that distress manifest.And as in 2008, the Sun Belt could serve as a sort of bellwether. Inflation is showing early signs of moderating nationwide, with price increases slowing to 8.5 percent in the year through July, from 9.1 percent the previous month. Still, the same forces that are now causing prices to surge across the South could keep inflation elevated for a longer period.That’s because a less-intense version of the rent surge that is pushing inflation higher across cities in the American south is beginning to play out in bigger cities in the Northeast and on the West Coast. Real-time market rent trackers that reported prices shooting up in Sun Belt cities last year are now showing bigger increases in places like New York, San Jose and Seattle.Inflation F.A.Q.Card 1 of 5Inflation F.A.Q.What is inflation? More
