How rising prices affect people differently, and what it says about the economy

Connie Myers has always loved a good sale. Two years ago, she would shop sales at her local grocery stores in Winchester Bay, Oregon, but often pay full price for most other products. However during the pandemic, she noticed her dollar didn’t stretch as far. 카지노사이트

Myers clipped coupons much more religiously at the start of the pandemic. She had a feeling prices would continue to rise after the global toilet paper shortage, a feeling reflected in polls about people’s worries about the country’s overall financial outlook. The 59-year-old is retired and lives on a fixed income of social security and disability payments, so she can’t afford to go over her budget. Now, Myers plans her shopping around the coupons she’s collected, and it’s rare for her to pay full price for an item.

“I’ve been a single parent my entire life, so I know how to be frugal,” she said. “But still for a family, if I had a child right now, oh my gosh. I can just imagine what it would be like.”

Food prices rose around 9 percent between January 2020 and October 2021, according to Econofact. Food prices have been particularly volatile throughout the coronavirus pandemic, like in March 2020, when empty store shelves were a familiar sight.

In the past 12 months, inflation rose about 6.2 percent, according to the Labor Department. This is the largest 12-month inflation increase since 1990.

WATCH MORE: What’s driving U.S. inflation and how price pressures could be reduced

Alongside groceries, people in the U.S. have seen prices rise for cars, gas, rent and other necessities. For lower-earning households, these increases have been especially challenging.

At the same time, many experts say the economy is showing other signs of strength. Let’s take a closer look at the data.

What data supports that the economy is good right now?

Inflation and the unemployment rate are two common indicators for evaluating the health of the economy. While inflation has increased, the unemployment rate fell to 4.6 percent at the end of October — the lowest since April 2020, when the unemployment rate hit a historic 14.8 percent at the beginning of the pandemic.

“The cost of unemployment to the individuals who are unemployed is a lot higher than the cost of inflation,” said Michael Klein, an economics professor at Tufts University and executive editor of Econofact. “An increase in the unemployment rate by two percentage points, I would say, is more damaging than an increase of inflation by two percentage points.” 안전한카지노사이트

But the impact of being unemployed is only felt by those who are unemployed, while inflation can be felt by everybody, which can sometimes lead to a misunderstanding of the economy, Klein said.

The nation’s gross domestic product — the total output of goods and services — has continued to grow as well, increasing by 2 percent in the last quarter. This is a slower growth than previous quarters, but according to Stanford University a GDP increase of about 2 percent is a sign of a steady economy. Economists say this shows recovery from the 31.2 percent drop in GDP in the second quarter of 2020 — the largest drop in U.S. history.

Some of the increases people are feeling right now could be considered catching up in prices as the economy recovers from the pandemic, economists told the PBS NewsHour.

WATCH MORE: Inflation a major issue facing the Biden administration

Klein said these price increases are following a time when prices were at historic lows — when the economy was unhealthy — so it feels particularly jarring, especially to those with lower income. But people are returning to work, some lower-paying jobs are offering higher wages, and the general economy has grown.

“In September, inflation was about 5.4 percent [over the previous year]. If you took the annual rate by looking back two years instead of one year, inflation was only 3.4 percent,” Klein said. “If you normalize them more by looking back two years when we weren’t in the midst of this terrible downturn, then inflation doesn’t look as big.”

For example, data from the Federal Reserve Bank of St. Louis shows when compared to one year ago, food and beverage prices in U.S. cities in October are up 5.1 percent. But compared to two years ago, the inflation rate is 4.5 percent, and 3.5 percent when compared with three years ago.

Experts are not sure how long rising prices will last, but it’s something the Federal Reserve is watching closely.

According to Econofact, the average rate of inflation for the past decade averages about 1.7 percent — just below what the Federal Reserve deems an acceptable rate, which is around 2 percent.

How inflation affects us differently

There are other conditions that can affect how certain groups of people experience increasing inflation. For instance, SNAP benefits and social security payments often increase a small percentage each year to account for general increases in the cost of living. But for food, current monthly price increases outpace benefit increases, which can make it difficult for people who are on fixed incomes or unable to work.

“Increased prices erode peoples’ buying power,” said Jayson Lusk, a food economist and professor at Purdue University. He added that people can make decisions to buy different food items that are cheaper than they’re used to to mitigate price increases, but that isn’t always feasible or ideal.

Economists have attributed the heightened prices to different factors, from wage increases to the pandemic’s domino-like effect on the supply chain. Lusk said that while prices have increased, so have wages in many industries. Wages for meat-packing jobs, for example, have increased nearly 20 percent due to labor scarcity, which has put upward pressure on meat prices. But that also has given those who work in the meat industry more buying power, because their wage increases outpace price increases.

READ MORE: How the supply chain caused current inflation, and why it might be here to stay

“If you’re on a fixed pension or you’re stuck in a salaried position that’s not hourly and maybe doesn’t get changed as frequently, you’re not as well off. But if you kind of look across the board, across the economy, wages have been increasing,” Lusk said. He added that focusing on a person’s buying power may be a better measure of financial well-being than just prices alone.

Neil Berger teaches at a Title 1 school in Phoenix, Arizona — a state with one of the lowest teacher salaries in the nation. He and his wife, who works at the same school, have had to cut back on saving for their retirement and switched to buying groceries that have more longevity, like frozen produce and less meat. They’ve also begun gardening in order to grow their own produce.

Berger and his wife bought a house in February 2020, and with the skyrocketing inflation in the housing market they were able to refinance their mortgage to find more balance. But for his students’ families, Berger said, finding an affordable place to rent seems impossible, and parents talk to him about the increased grocery prices often.

The Bureau of Labor Statistics found that households in the lowest 20 percent of income spend 10.8 percent of their budget on food while those in the highest 20 percent spend 6.8 percent of their budget on food.

Eva Aleman, 54, said she cannot work because of her disabilities and lives in public housing in Jacksonville, Florida. She receives a fixed income and SNAP benefits, and is struggling to buy groceries. She said it’s been difficult because prices have gone up, but her income has stayed the same.

The only meat she said she can afford is chicken, and it has to be in small portions. She buys fruit and vegetables, and cut back on milk, buying 1 gallon a month instead of weekly, she said.

Local churches and food pantries give out groceries, she said, but they often run low on products. Aleman also said churches also don’t tend to carry Hispanic foods, which can make it difficult to shop for meals that align with her culture. She said her neighbors in her complex, who are all over 60, are also struggling. Latinos are among people who were most affected by the economic impact of COVID-19, experiencing more job loss, less pandemic relief, and more difficulty making payments, according to a report by Brookings.

“We need more sympathy and empathy for us and ask us, you know, what is that we need? We need help with the struggling and not being able to buy what we need to eat,” Aleman said.

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