May 24, 2024


Complete Australian News World

Inflation is slowing.  Here’s Why Prices Aren’t Going Down – NBC 5 Dallas-Fort Worth

Inflation is slowing. Here’s Why Prices Aren’t Going Down – NBC 5 Dallas-Fort Worth

  • Historical data indicate that the main factor in lowering prices is the slowdown in consumer spending.
  • Even though nearly half of Americans report being in a worse financial situation than they were five years ago, they are still spending.
  • Retail sales rose 2.1% year-on-year in the first quarter of 2024 and consumer spending jumped in February and March.

Jane Luke, 27, is a recipe developer based in Boston who creates online content that shows people how to eat well On budget.

“I think it’s no secret that prices are going up almost across the board right now,” Locke told CNBC.

About two-thirds, 65%, of US adults A CNBC/SurveyMonkey poll this spring said inflation is the main driver of their financial stress. The same group said they were alive Salary to salary. Nearly half feel they are in a worse financial position than they were five years ago.

In January of last year, Lueke started a social media series where she took one $50-$75 grocery list and turned it into five different recipes for their family. She was inspired to show people that they can still eat well while cutting grocery costs.

Zach Stavier for CNBC

Jennifer Locke, 27, creates a budget-friendly recipe for her audience of millions on social media.

“It’s really hard. I’m not here to share positive, toxic ideas about how to shop on a budget,” Luke said. “I’m just trying to empower people to feel like they can have a little bit of control, at least in that area of ​​their food costs.”

Deflation, Deflation and the “Money Illusion”

“I think Americans are a little confused when they see news reports about inflation going down, and yet they don’t see their prices going down,” said Lindsay Owens, executive director of the nonprofit Groundwork Collaborative.

READ  Credit Suisse repays debt to calm investors

There is an important difference between inflation increasing more slowly – a phenomenon called disinflation – and inflation that reverses itself, which can lead to lower prices. Economists call the latter deflationwhich is usually associated with economic contraction and possible recession.

Historical data shows that it is much easier for prices to rise than for them to fall. When they go down, it’s usually because people are spending less, which is not the case currently. Retail It rose 2.1% year-on-year in the first quarter of this year Consumer spending jumped In February and March.

“This cycle is a concept called the money illusion,” said clinical psychologist Sabrina Romanoff.

“People who have the illusion of money…do not take into account the level of inflation in the economy,” she said. “So they mistakenly believe that a dollar today is worth the same amount as it was the year before.”

Experts have raised concerns about the potential for “pockets of trouble”. With total credit card balances in the United States rising to A record amount of $1.08 trillion In the third quarter of 2023. Nearly half of Americans, 49%, have credit cards They say they carry a balance from month to month, according to a November 2023 Bankrate survey.

Wage increase data may also appear inconsistent with consumer experience. wages has been on the rise since January 2022, But the pace of increase is slowing down, and on average it keeps pace with rising prices. An analysis from Bankrate estimates the gap between inflation and wages It will not close completely until the fourth quarter of 2024.

READ  Tesla Motors, Inc. (NASDAQ: TSLA), Dogecoin - USD (CRYPTO: $DOGE) - Elon Musk asks "Is a new platform needed?": Changing Twitter's logo from Bird to Doge will be "Sickkk"

“For many Americans, wage growth is long overdue,” Owens said. “They have spent years, if not decades in some cases, with stagnant wages or small raises.”

Watch the video Above to learn more about why prices are unlikely to come back down.