A lot of the news lately has centered on rising gas and grocery prices, but overall consumer prices are up across the board. Inflation is so out of control that average Americans are now paying more than they were in 2023 when prices soared after the pandemic.
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The Federal Reserve had a goalof keeping inflation at 2%, but recent reports show the actual rate was closer to 2.8%, while wages fell 0.5% over the past month and 0.3% so far this year. In plain language, that means that the cost of nearly everything is skyrocketing while wages are actually declining.
“Inflation is the key drag on the U.S. economy now,” said Heather Long, chief economist at Navy Federal Credit Union. “This is hurting Americans. There is a real financial squeeze underway. For the first time in three years, inflation is eating up all wage gains. This is a setback for middle-class and lower-income households, and they know it.”
Related: Beloved Chain Restaurant Raises Menu Prices Thanks to Inflation
What's The Main Cause?
The war in Iran is driving up prices from the noticeable fuel charges at the pump to the cost of a mortgage. Oil is trading at over $100 a barrel, and the national average for gas is $4.50 per gallon, according to AAA. Only one state, Oklahoma, has an average gas price under $4.00 per gallon, while California has the highest at about $6.15 per gallon.
But while gas and groceries are getting all the press, the cost of everything is increasing. Nearly 50% of young Americans have stopped dating altogether, citing it as an expense they simply can’t afford. Even the very stable real estate market in California has taken a hit, with housing prices falling nearly 11% in certain parts of the state.
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Looking Ahead
Given the rate of inflation, it’s unlikely the Fed will lower interest rates any time soon. This is bad news for everything from new car sales to home buying. More Americans are holding onto their money rather than making purchases. Popular Reddit threads feature everyday people sharing their most frugal tips for getting by without spending a dime.
Given that the war in Iran is driving global prices, it’s unlikely we’ll see a reprieve any time soon. With the actual inflation numbers outpacing the Fed’s goals, all we can do is make smart money moves until something finally gives.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
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