The media has successfully convinced the public that Americans are grappling with an affordability crisis. After nearly five years of soaring prices, many feel they can no longer afford everyday purchases, leading to a significant drop in consumer confidence. But can we genuinely label this as an affordability crisis?

In New York City, a Democratic Socialist managed to persuade a majority of citizens that this crisis is indeed real. His solution? Offering free services and promising to make apartments more affordable by freezing rents.

Yet history shows that price freezes tend to backfire, resulting in even higher prices once the freeze is lifted. They often lead to shortages, too. Take the example of 1971, when President Nixon implemented a temporary, 90-day freeze on prices and wages as part of his so-called New Economic Policy.

Initially, it seemed effective, but once the freeze ended, prices skyrocketed. By 1974, inflation surged to 12%, accompanied by significant shortages of essential goods like beef and gasoline.

Nixon extended his price-fixing policies on gasoline, creating a gasoline shortage that necessitated rationing, with motorists only allowed to buy gas on specific days.

Fast forward to today, and the so-called affordability crisis is truly a misconception. While consumers certainly feel the pinch from higher prices, they continue to make purchases, indicating they can still afford them.

If there were a genuine affordability crisis, it would resemble the period from 2021 to 2024, when the Consumer Price Index reported an average increase of over 20% for goods and services, while household income only rose by less than 19%.

During that time, one could argue that an affordability crisis existed, as households struggled to maintain their previous buying habits. Strikingly, this concept of an affordability crisis was rarely mentioned back then.

Now, politicians are eager to drum up concern about an affordability crisis. With the media spotlight shining brightly, many consumers are starting to internalize the narrative, thinking, “I did have to cut back on purchases last year due to high prices. So yes, maybe we do have an affordability crisis.”

Yet today, this sense of crisis is misplaced.

Despite some data gaps arising from the government shutdown, current indications suggest that prices have risen by less than 3% this year, while incomes have increased by nearly 4%. When income growth exceeds price increases, there is no affordability crisis.

That said, specific markets can indeed experience affordability issues. For some products, such as homes or apartments, prices and rents have surged at a pace well above the 20% CPI growth from 2021 to 2024. This surge results from a lack of new units being constructed, combined with rising demand driven by immigration.

In these specific markets, an affordability crisis is real.

However, across the broader economy, the narrative changes; there is no overarching affordability crisis, and conditions are improving. Overall, consumer spending is on the rise, contributing to heightened economic growth.

While consumers may grumble about high prices and express their lack of confidence in the economy, they are generally continuing to spend. Many are even resorting to credit cards to finance their purchases, as evidenced by a more than 5% increase in credit card debt in the third quarter of this year compared to last.

The increased use of credit cards indicates that consumers feel confident that they will be able to meet future credit card payments.

The average American may feel as though they are just treading water economically, believing they should be better off with rising incomes. Yet high prices keep them feeling stagnant, which fuels their misconception of an affordability crisis.

Fortunately, the landscape is evolving. This year has already seen changes, and next year promises even more. Falling energy prices, along with increases in business activity, are expected to bring the inflation rate down, leading to actual price reductions on some goods. Continued economic growth will drive up wages and incomes.

For now, all we need to do is stay the course, and the misconception of an affordability crisis will melt away faster than winter snow under the warm spring sun.

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Michael Busler is a public policy analyst and a professor of finance at Stockton University in Galloway, New Jersey, where he teaches undergraduate and graduate courses in finance and economics. He has written op-ed columns in major newspapers for more than 35 years.