How much farther can Americans stretch their dollars?

Posted By on June 18, 2014

Ukraine continues to be under siege, SE Asia and Africa have unstable countries, Afghanistan will most likely go back to Taliban control, Iraq is imploding … but European markets are said to be in “recovery” and U.S. stock indices bondimagecontinue setting new highs and generating overly inflated annual returns for those “fully” invested (since when do these returns continue indefinitely?) Perhaps I’m just a “worry wart,” as my mom would have said, but then again yesterday I noticed consumer prices increased in May by the largest amount in more than a year. This can’t be good for middle and working class Americans already stretched to make ends meet. The cost of food and gasoline increased the most and airline fares jumped by the largest amount in 15 years. Maybe nobody told me that we have full employment and the numbers are reflecting that (sarcasm), or every average household has seen their annual take-home pay increase $4000 in the past few years (half-joking)? No … actually the cost of living is rising … but the incomes for middle and working class families is not.

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The Bureau of labor Statistics reported that the CPI (Consumer Price Index) rose 0.4 percent in May this week which makes it the biggest one-month jump since February 2013. That means that over the past 12 months, consumer prices are now up 2.1 percent which is the biggest 12-month price change since October 2012. Not in itself a worry since this is in-line with the Federal Reserve’s 2 percent yearly target, but the Fed will need to at least acknowledge “that price pressures are growing." 

A change coming and according to Paul Dales, senior U.S. economist at Capital Economics, and the Labor report increases "the chances that it [the Fed] will raise interest rates before the middle of next year." “The days of low inflation and lower interest rates are now behind us” said Jennifer Lee, senior economist at BMO Capital Markets,  and this is not helpful to Americans already feeling pinched … they will have to find new ways to either work more or stretch their dollars, or both.

Comments

Desultory - des-uhl-tawr-ee, -tohr-ee

  1. lacking in consistency, constancy, or visible order, disconnected; fitful: desultory conversation.
  2. digressing from or unconnected with the main subject; random: a desultory remark.
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