If you’ve shopped for anything in the last year, you know that the United States is seeing some major inflation. The cost of just about everything you buy is higher than it was before the pandemic affected the economy. Now more than ever, families across the nation are feeling the pressure of inflation.
According to Fox Business, retailers saw increased spending over 2020 and 2021. At that time, consumers were getting a little extra cash from stimulus checks. However, things started to slow down as 2021 came to a close. Families and other consumers started feeling the effect of inflation. As a result, retail sales dropped nearly 2%. Additionally, non-store retail, including e-commerce also took a major hit. According to the publication non-store retail “plummeted 8.7% month-over-month after a slower 1.5% decline in November.”
This is just one factor that leads experts to believe that pandemic spending is catching up with consumers. Additionally, American families are going deeper into debt due to inflation.
American Families Feeling the Pressure of Post-Pandemic Inflation
Most American families received some sort of pandemic relief funds. However, more than 33% of those families say that their financial situations have worsened due to job loss, inflation, and other factors. On average, American households carry a little over $155,000 in debt. Collectively, American households are carrying an astounding $15.23 trillion in debt. This is up 6.2% from a year ago.
James Knighley, chief international economist with ING discussed the causes of this financial decline. “The dollar in your pocket isn’t going as far, and highly visible prices where you conduct regular transactions, such as food and gasoline, are surging.” This inflation, he said, is making American families and other consumers “angry and cautious at the same time.”
Additionally, inflation is causing many families’ real incomes to drop. In many cases, wages have increased. A shift in the labor force pushed many employers to increase hourly pay. However, with inflation, they’re actually bringing in less money. When figuring for the current inflation rate, average hourly wages dropped 2.4% in December.
Sara Rathner, a credit card and travel expert with NerdWallet said, “It’s harder to afford everything you need every day. Not just groceries and gas, but bigger things like housing and medical expenses.”
A Shift in the Workforce
Mark Hamrick, Bankrate.com’s senior economic analyst said that there is an end in sight. He predicts that things will shift to a more “positive” dynamic by the third quarter of 2022. “…many in the workforce have been and will be inclined to try to forge ahead by seeking employment that pays more and provides for better working conditions.” Those workers, he says, will be looking for more flexible hours and positions that hire remotely when possible.