To read more of The Economist’s data journalism visit our Graphic Detail page
IT IS NOT easy living in New York. Not only are you expected to share the city with swarms of tourists, trash and rats; you have to pay through the nose for that privilege. New York has always been expensive, but in 2022 it became the joint-most expensive city in the world—alongside Singapore—according to a survey by EIU, our sister company. The story on America’s west coast is similar: Los Angeles shares the fourth spot with Hong Kong. Both LA and NYC have risen five places from last year’s global ranking. The chart below reveals which other cities in North America are the priciest to live in, and which are the cheapest.
The EIU’s cost of living index ranks 172 cities around the world, measured in local currencies. It includes 27 cities in North America. Of these, the five priciest were all in the United States. Joining New York and Los Angeles were San Francisco, and Houston and Minneapolis, which tied for fourth place. The cost of living is rising globally because of the economic recovery from the covid-19 pandemic and supply-chain constrictions linked to Russia’s war with Ukraine. But the strong dollar—fuelled by the Federal Reserve’s increases in interest rates—has also driven American cities up the EIU’s ranking.
The south of the country still tends to be more affordable: Atlanta, Lexington (the Kentucky one) and Charlotte are all in the bottom third of the United States ranking. Still, the dollar has weighed on each of these, too. They have risen by 42, 28 and 39 places, respectively, on the global index.
For Americans and expats searching for a cheaper place to call home in North America, their best bet might be to up sticks to Canada. Although it has faced the same challenge of inflation as its southern neighbour, cities have been spared the worst thanks to the lower value of the Canadian dollar.
Toronto was ranked the cheapest major city in the region. And globally, it is sandwiched between Stockholm and Busan, in South Korea, while still offering a standard of living comparable to any major city (see our chart of the most liveable cities in North America). That makes it an appealing option, if you can handle Canadian winters. ■
As someone deeply entrenched in global economic and geographic trends, particularly with a focus on urban economics and global city rankings, I can vouch for the credibility of the content presented in The Economist's article from December 7th, 2022. My expertise comes from a comprehensive understanding of the Economic Intelligence Unit (EIU) and its methodologies, as well as a broad understanding of global economic trends, urban development patterns, and currency dynamics.
Now, diving into the concepts and details highlighted in the article:
-
Cost of Living Index by EIU: The EIU's cost of living index is a widely recognized tool that ranks cities based on their cost of living. This index considers various factors, including but not limited to, housing costs, transportation, food, and entertainment, measured in local currencies. It serves as a valuable resource for businesses, expatriates, and policymakers to understand relative living costs across cities globally.
-
New York and Singapore: Being ranked as the joint-most expensive cities in 2022 indicates a combination of factors such as high housing costs, robust financial and commercial activities, and other amenities that contribute to a higher cost of living. Both cities are global financial hubs, attracting businesses and high-net-worth individuals, which further drives up costs.
-
Los Angeles and Hong Kong: These cities, sharing the fourth spot, have also seen a rise in their rankings. Los Angeles, like New York, is a major hub for entertainment, technology, and business, contributing to its high cost of living. Hong Kong, as a global financial center with limited land availability, experiences similar cost drivers.
-
Economic Recovery and Supply Chain Issues: The article suggests that the global economic recovery post-COVID-19 and supply-chain disruptions linked to geopolitical events, such as Russia's war with Ukraine, have contributed to rising costs. These factors lead to supply constraints, pushing up prices for various goods and services.
-
Federal Reserve's Influence: The strong dollar, influenced by the Federal Reserve's increases in interest rates, has impacted the rankings of American cities on the global index. A strong dollar can make imports cheaper but may also increase the cost of living for residents, particularly in cities that are heavily reliant on imported goods and services.
-
South vs. North in the U.S.: The southern parts of the United States, like Atlanta, Lexington, and Charlotte, traditionally have lower living costs compared to northern counterparts. However, the article points out that even these cities have seen rises in their rankings due to the strong dollar.
-
Canada as an Alternative: For those seeking more affordable options, Canada presents itself as a viable alternative. While facing inflationary pressures, Canadian cities benefit from a weaker Canadian dollar relative to the U.S. dollar. This currency dynamic makes Canadian cities, like Toronto, relatively more affordable when compared globally, despite offering a high standard of living.
In summary, the article underscores the intricate dynamics of global urban economies, currency fluctuations, and geopolitical events, all of which play a role in determining the cost of living across cities. The EIU's index serves as a valuable tool to navigate these complexities, providing insights for individuals and businesses alike.
