Due to exponential growth, that would become brutal after just a few years, and you'd easily notice a diminishing standard of living as most Americans spend close to all of their paychecks on a monthly basis, without much wiggle room.

I think that's actually what we've been living through in the US for a while now, though not nearly as high 7% and real inflation has technically been limited to a subset of goods and services. Which means that it's low enough that people don't really notice things getting worse and worse, until they're shocked into realization when buying a large ticket item like a new car or a home, and they see just how much purchasing power they've lost compared to even a decade before.