Renowned macro research institution Hedgeye stated on social platform X that the dollar has lost 30% of its purchasing power over the past six years. This data has been widely cited and discussed in various media outlets and financial bloggers, including The New York Times.

According to the Consumer Price Index (CPI) data from the U.S. Bureau of Labor Statistics (BLS), the cumulative increase in U.S. consumer prices from 2020 to the present is approximately 29% to 30%. This means that $100 worth of goods in early 2020 now requires about $129 to $130 to purchase the same quantity. If measured by the "Dollar Purchasing Power Index" compiled by the Federal Reserve Bank of St. Louis (FRED), this index has dropped from 39.7 points in 2019 to 30.8 points in September 2025, a decline of about 22%. The expressions "prices have risen by 30%" and "purchasing power has decreased by about 23%" are mathematically mirror images of each other—media often simplify both to the same "30%" for reporting, while there is actually a difference of about 7 to 8 percentage points between the two measures.

Looking at annual data, the year-on-year increase in the U.S. CPI was about 4.7% in 2021, exceeded 8% in 2022, and remained above the Federal Reserve's long-term inflation target of 2% from 2023 to 2025. As of the latest data in May 2026, the year-on-year increase is about 4.2%, with inflationary pressures not fully retreating to policy target levels since the outbreak of the COVID-19 pandemic.

Analysts generally attribute this significant erosion of purchasing power to large-scale fiscal stimulus and monetary easing policies during the pandemic—broad money supply M2 saw significant expansion during the pandemic response, combined with supply chain disruptions that drove up prices of goods and services, forming the main driving factors of this round of inflationary pressure. Additionally, data previously disclosed by research institution Creative Planning shows that since January 2021, the nominal average hourly wage in the U.S. has increased by about $5.30, but after adjusting for inflation, the actual purchasing power has decreased by about $0.49. This gap between nominal and real wages has been referred to by some economists as a "hidden inflation tax."

If the observation period is extended to 30 years, the erosion of the dollar's purchasing power is even more significant—according to relevant statistics, the dollar's consumer purchasing power has cumulatively declined by about 50% to 53% over the past 30 years. In contrast, the cumulative inflation-adjusted increase of the S&P 500 index during the same period is about 972%, with an annualized return of about 8%, which is also an important data support for some investors viewing equity assets as a hedge against long-term inflation.

From the market transmission mechanism perspective, the core reason for the continuous erosion of purchasing power is the long-term imbalance between the expansion of money supply and the growth rate of real goods and services output. Excess liquidity ultimately transmits and releases in the economic system through rising prices of consumer goods, energy, and assets; ordinary savers holding cash and fixed-income assets are the direct parties under pressure from the erosion of purchasing power, while investors holding inflation-resistant assets such as stocks, real estate, commodities, and Bitcoin benefit relatively from nominal asset prices rising in tandem with inflation. This is also an important background for the continuous flow of institutional and retail funds from traditional savings accounts to equity assets and alternative asset allocations in recent years, attempting to hedge against long-term purchasing power risks.

Source: Public Information