The cost of living has been the most popular topic in the media for more than a year now. Just as the American economy was recovering from the coronavirus pandemic, inflation reared its head as the expansionary fiscal policy adopted by the Federal Reserve during the pandemic lead to tons of cash flowing through the market. Inflation in America started to rise in February 2021 when it jumped to 1.7% from January’s 1.4%. It continued to rise until June 2021, when it sat at 5.4% and ended up closing the year at 7%. However, during this time period, the Federal Reserve did not increase interest rates as it believed that the inflation would be ‘transitory.’
The central bank was proven wrong, as the close of January and February saw inflation rise further to 7.5% and 7.9%, respectively. When it became clear that inflation was not starting to come down, the Fed started an aggressive series of interest rate hikes in March 2022, which saw it raise the rates from 0.25% to a whopping 5% as of March 2023. These included five massive 75 basis points (0.75%) interest rate hikes, which shattered the stock market and caused funds to flow away from stocks to accounts and other fixed investments. Globally, as other major currencies failed to keep up with the American interest rate hikes, they fell as well since the global financial system allows for an easy flow of capital across borders.
However, it’s looking as if the Fed’s interest rate fight against inflation is starting to bear fruit. Inflation in America fell to 5% in March 2023, reversing all the gains that it made in 2022 and reverting back to levels seen in May 2021. At the same time, there is a growing consensus among both analysts and economists that a recession is also on the horizon in America. A recession, defined as two consecutive quarters of economic growth, occurs when economic output drops. This, in turn, happens when businesses find it difficult to do remain afloat, and consumers are enticed to save due to high interest rates.
Talking about recession, The Conference Board believes that the second quarter will be the moment of truth for the U.S. economy. Its probability of a recession is sitting at a whopping 98% for the next twelve months, with the first signs appearing in the current quarter — Q2. Building on this, two of the biggest bond investors in America are conflicted about whether a recession will really take place in 2023. For instance, managers of the Reams Asset Management’s Carillon Reams Core Plus Bond Fund believe that instead of a recession, the economy will mildly slow down later this year, in what is commonly called a soft landing. However, still, on the flip side, those responsible for the Columbia Total Return Bond Fund believe that the Federal Reserve has outreached in its quest to bring down inflation, and its action will cause U.S. bond yields to fall.
The latest data for inflation was one of the more commonly watched metrics, with the March 2023 figures showing that prices had continued their downward trend. This led to cautious optimism among some in the market who had hoped that the Fed might stop increasing the rates once and for all. However, the president of the St. Louis Federal Reserve James Bullard dashed these hopes in an interview given to Reuters in April 2023. Mr. Bullard outlined that Wall Street is reading the entire recession debate wrong since the labor market is strong which is a big stimulant for consumption. And when consumption is high, a slowdown in the economy becomes more difficult to predict.
According to the Fed official:
Wall Street’s very engaged in the idea there’s going to be a recession in six months or something, but that isn’t really the way you would read an expansion like this. . . . the labor market just seems very, very strong. And the conventional wisdom is that if you have a strong labor market that feeds into strong consumption … and that’s a big chunk of the economy … it doesn’t seem like the moment to be predicting that you have a recession in the second half of 2023.
Reuters also reported:
Recession forecasts “are coming from models that put too much weight on the idea that interest rates went up quickly,” Bullard said. “What about the strong labor market? What about that feeding consumption? … What about the pandemic money still to be spent off, both at the state and local level and at the individual household level?
“Inflation is coming down, but not as fast as Wall Street expects.”
With these details in mind, let’s take a look at some of the most expensive cities to live in the U.S.
Our Methodology
To compile our list of the most expensive cities to live in America, we used cost of living indexes from Numbeo and Expatistan. Then, the 30 cities that are common in both lists were picked, and the cost of living score was averaged to compute the list of the most expensive cities in the U.S.
Biggest Cities to Live in the U.S.
30. Tucson, Arizona
Insider Monkey’s Cost of Living Score: 99.6
Tucson is the second largest city in the U.S. state of Arizona. It has a population of roughly half a million people and a vibrant economy.
29. New Orleans, Louisiana
Insider Monkey’s Cost of Living Score: 103.9
New Orleans is the most populous city in the U.S. state of Louisiana. It is a major port city with one of the busiest ports in the world.
28. Detroit, Michigan
Insider Monkey’s Cost of Living Score: 104.05
Detroit is the largest city in the U.S. state of Michigan and a major economic hub in the American Midwest. It houses more than four million people.
27. Baltimore, Maryland
Insider Monkey’s Cost of Living Score: 107.6
Baltimore is Maryland’s most populous city and houses close to 600,000 people. It houses the headquarters for major shipping lines in America and is a popular tourist destination.
26. Orlando, Florida
Insider Monkey’s Cost of Living Score: 111.25
Orlando is one of the most popular tourist destinations in Florida. The city is also known for the presence of some of the most technologically advanced firms in the world.
25. Pittsburgh, Pennsylvania
Insider Monkey’s Cost of Living Score: 111.45
Pittsburgh is the second most populous city in Pennsylvania. It houses a large number of Fortune 500 companies.
24. Anchorage, Alaska
Insider Monkey’s Cost of Living Score: 112.4
Anchorage is the largest city in the U.S. state of Alaska. It is also one of the largest cities in Alaska in terms of area and relies on natural resources for its economy.
23. Phoenix, Arizona
Insider Monkey’s Cost of Living Score: 114.15
Phoenix is the capital of the U.S. state of Arizona and houses a whopping 1.6 million people. The city also has several Fortune 500 companies.
22. Minneapolis, Minnesota
Insider Monkey’s Cost of Living Score: 114.65
Minneapolis is the most populous city in Minnesota. Fortune 500 firms, such as Target, are headquartered in the city.
21. Atlanta, Georgia
Insider Monkey’s Cost of Living Score: 116.5
Atlanta is the capital state of Georgia and houses close to half a million people, making it the most populous in the region.
20. Chicago, Illinois
Insider Monkey’s Cost of Living Score: 117.35
Chicago is one of the most populous cities in the U.S., with a population of 1.3 million people. It has a $765 billion economy, the third largest in America.
19. Austin, Texas
Insider Monkey’s Cost of Living Score: 117.9
Austin is the capital city of Texas which houses almost a million people – making it one of the largest in America.
18. Raleigh, North Carolina
Insider Monkey’s Cost of Living Score: 118.95
Raleigh is the capital of North Carolina and is the second most populous city in the state.
17. Sacramento, California
Insider Monkey’s Cost of Living Score: 119.05
Sacramento is the capital of California, one of the most prosperous states in America. It houses more than half a million people.
16. Tampa, Florida
Insider Monkey’s Cost of Living Score: 120.3
Tampa is one of Florida’s most populous cities. It has a strong presence of the insurance, financial, and healthcare industries.
15. Philadelphia, Pennsylvania
Insider Monkey’s Cost of Living Score: 122.1
Philadelphia is a former U.S. capital and the most populous city in Pennsylvania. It headquarters several large firms such as Cigna and Comcast.
14. Dallas, Texas
Insider Monkey’s Cost of Living Score: 124.7
Dallas is among the top ten most populous cities in America and houses more than a million people. It has the sixth largest economy in the U.S.
13. San Jose, California
Insider Monkey’s Cost of Living Score: 126.1
San Jose is an economic hub in California, and houses firms such as eBay, Cisco, and Adobe.
12. San Diego, California
Insider Monkey’s Cost of Living Score: 127.35
San Diego houses more than a million people and has a vibrant defense industry.
11. Portland, Oregon
Insider Monkey’s Cost of Living Score: 128.85
Portland is a port city and the largest in Oregon with more than half a million people in its boundaries.
10. Denver, Colorado
Insider Monkey’s Cost of Living Score: 129
Denver is the capital of Colorado. It houses more than 700,000 people, and the city is also a logistics hub in the Midwestern U.S. due to its location.
9. Seattle, Washington
Insider Monkey’s Cost of Living Score: 133.1
Seattle is the largest city in the U.S. state of Washington and an economic hub in the state. It houses several Fortune 500 companies such as Amazon, Starbucks, Microsoft, and Costco.
8. Washington, D.C.
Insider Monkey’s Cost of Living Score: 134.05
Washington is the capital city of the United States and therefore the center of power in America. This also lends it a strong presence of government contractors particularly due to its proximity to the Pentagon.
7. Los Angeles, California
Insider Monkey’s Cost of Living Score: 134.65
Los Angeles is the second most populous city in the U.S. with close to four million people. It is a cultural hub within California, known for its vibrant restaurant scene.
6. Boston, Massachusetts
Insider Monkey’s Cost of Living Score: 138.4
Boston is the capital city of Massachusetts and an economic hub within the state. It is known for a vibrant presence of the biotechnology industry. It also houses some of the largest firms in America such as General Electric and Liberty Mutual.
5. Honolulu, Hawaii
Insider Monkey’s Cost of Living Score: 139.5
Honolulu is the most populous city in Hawaii and also the capital of the state. This makes it a hub of economic activity in the state as well, particularly due to its port and location as a whole. The city also has a strong tourism industry.
4. Miami, Florida
Insider Monkey’s Cost of Living Score: 140.15
Miami is the second most populous city in Florida and houses close to half a million people. It is an economic hub within the state and houses more than a thousand multinational firms. At the same time, there are high levels of economic disparity in it as well.
3. Oakland, California
Insider Monkey’s Cost of Living Score: 143.85
Oakland ranks among the top ten most populous cities in California. Its economy is fueled primarily by its port, which is one of the busiest in America.
2. San Francisco, California
Insider Monkey’s Cost of Living Score: 148.25
San Francisco is a technology hub in America and the city is notorious for its high costs of living due to poor housing policies.
1. New York, New York
Insider Monkey’s Cost of Living Score: 162
Topping our list is America’s most populous city. New York is the world’s financial hub and a major tourist destination.
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This article is originally published at Insider Monkey.