With inflation, more money means less money in your pocket to buy the things you need.
With increases in federal borrowing, then the money you have is worth less, and interest on borrowed money goes up.
And the only thing going down, down, down is our standard of living.
But will the free money from the federal spigot stay flowing?
Nope. Then what? Savings and rainy day funds can buy you some time, but that piggy bank hidden in the closet can go broke too.
Well, my friends times will get tougher still as seen from the data in this Bloomberg update, extracted and summarized as follows—
Ah, the intriguing dance of the American economy. Recent revelations from the Federal Reserve suggest that a vast majority, specifically those outside the gilded top 20%, have seen their savings diminish, now possessing less than what they started with at the pandemic’s onset. As of June this year, after accounting for inflation, the financial reserves of 80% of households have shrunk compared to their state in March 2020. Every income segment has noted a decline since the peak of the savings in 2021. However, the top 20% seem to be comfortably floating with an 8% increase since the pandemic began. On the flip side, the bottom 40% witnessed an 8% dip, and the subsequent 40%, which we can label the “middle class,” have seen their savings retreat below pre-Covid levels. This scenario suggests that the financial resilience of Americans might be waning, despite their valiant efforts to prop up the economy this past year. With the drying up of surplus funds, economic observers are hinting at possible headwinds. (Source: Bloomberg com)
Home and car loan shoppers are in for a surprise – thanks to the Federal Reserve’s rate hikes, their bucks don’t stretch as far as they used to. And hey, if you’ve got a credit card? Ouch! Those interest rates have jumped too. Word on the street is that the Fed plans to keep these rates high. If you’re not borrowing, no sweat. But if you are? Yikes, it’s getting pricey. Liz Ann Sonders from Charles Schwab puts it simply: “The pinch is real!” (Source: wsj.com)