Insider Monkey

30 Most Expensive Cities to Live in the U.S.

Ramish Cheema
8 min read

In this piece, we will take a look at 30 most expensive cities to live in the U.S. For more expensive American cities, head on over to 10 Most Expensive Cities to Live in the U.S.

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.

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