Americans have been stressed out about money recently and the leading cause continues to be the high rate of inflation and increasing interest rates that have shrunk our pocketbooks over the past two years or so.
CNBC writes, “More than 40% of U.S. adults said that money concerns have a negative impact on their mental health, according to a recent survey from Bankrate. Of those who said money took a toll, most cited feeling stressed, anxious and overwhelmed.
‘When individuals suffer money challenges or they’re working through money issues, there’s tremendous potential for stress,’ said Mark Hamrick, senior economic analyst at Bankrate.”
This confirmed a recent survey out of the Dallas branch of the Federal Reserve, which stated, “Nearly all respondents, 97 percent, reported that prices were increasing, and almost half of those individuals—47 percent—felt very stressed by inflation. More than 60 percent were very concerned about future, short-term inflation.”
Inflation has outpaced wage gains, and it’s hurting the poor the most. The Dallas Fed recently showed “that high inflation is disproportionately hurting low-income households, including Black and Hispanic households and renters.”
The bank also took on some of the most famous liberal spinsters out there, who are pretending that normal people aren’t suffering. It noted, “It is noteworthy that the survey results do not support the recent suggestion of Nobel laureate economist Paul Krugman that low-income families ‘have actually been hurt less by inflation than families with higher incomes’ because the wages of low-income households rose faster.”
Unfortunately for all of us, it doesn’t look like inflation will be gone anytime soon.
Following a quarter-percentage-point rate increase on Wednesday, the Federal Reserve Chair Jerome Powell stated that his views on inflation and what the central bank should be doing have not changed. He stated that despite it slowing down, inflation is still too high and won’t get down to his stated target of two percent until the labor market weakens.
The Wall Street Journalreports, “At the root of the divide between the markets and the Fed (and, increasingly, between Fed officials) are data that on the one hand show falling wage and price inflation, and on the other, an economy, and labor market in particular, with too little slack.
Mr. Powell acknowledged that recent data has been encouraging. Inflation excluding food and energy, as measured by the Fed’s preferred index, fell from 5.4% last March to 4.4% in December, and was running at just 2.9%, annualized, in the last three months.
We can now say for the first time the disinflationary process has started,” he said. In fact, he argued the Fed’s initial view that much of the rise in inflation would be transitory has been borne out, though it took more than a year longer than expected.
So why no victory lap? Because as Mr. Powell emphasized, even if most of the rise in inflation was transitory, some of it wasn’t. Falling goods prices led the recent moderation in core inflation, the predicted result of supply chains becoming unsnarled and consumer demand rotating back to services. But just as the initial spike in goods prices was transitory, so will this recent decline, Mr. Powell noted.”
While inflation continues to hurt everyone, and if Powell is right, it’s going to continue to last for a bit longer than all of us hoped.
Time Magazineoffered four strategies to help cope with rising costs. Here are some of the strategies laid out by the experts interviewed by the magazine: that will help you survive, and hopefully, feel less stressed out:
Investing the cashflow you have, outside of your emergency fund, is one way “to keep up with or even outpace inflation,” says Samuel Deane, founder of Deane Wealth Management, a financial planning firm.
You may be able to offset some of the increase in your expenses by taking a closer look at your bills, cutting what you don’t need and trying to reduce or negotiate the rest. Looking at all your bills is an easy place to start, says consumer finance expert Andrea Woroch. We often shop around for the best price when we initially purchase something like insurance, but over time the price goes up and you don’t continue to shop around, she says.
Common bills that could be cut or reduced include:
Look Into I Savings Bonds
For extra money that’s sitting in your savings account and earning an interest rate that is far below inflation, Series I savings bonds could be a better option. But whether or not this makes sense depends on when you’ll need to access the money.
Increase Your Income
The unemployment rate has nearly returned to prepandemic levels and many businesses are struggling to hire. While it may not be easy to increase your pay overnight, in today’s job market employees are better positioned to shop their services around or negotiate for better pay. I’ve had clients who pointed to higher inflation, as well as their job performance, to get a promotion or raise, Deane says.