Inflation has 61% of Americans living paycheck to paycheck and Feds considering raising interest rates again

Fed-Rate-Outlook

Important Takeaways:

  • 61% of Americans are living paycheck to paycheck — inflation is still squeezing budgets
  • The number of Americans who say they are stretched thin has remained stubbornly high, according to several reports.
  • Federal Reserve Chair Jerome Powell recently called for continued vigilance in the fight against inflation, warning there may even be more interest rate increases to come.
  • The battle against inflation is not over.
  • As of July, 61% of adults still said they are living paycheck to paycheck, according to a new LendingClub report, slightly more than last year’s 59%.
  • June and July both saw easing in the pace of price increases, with core inflation up 0.2% for each month, according to the U.S. Bureau of Labor Statistics.
  • But in recent remarks, Federal Reserve Chair Jerome Powell said inflation “remains too high” despite those positive indicators, and warned that more interest rate hikes are still possible.
  • Central bank officials have already raised rates 11 times, pushing the Fed’s key interest rate to a target range of 5.25% to 5.5%, the highest level in more than 22 years.
  • Now, 78% of consumers earning less than $50,000 a year and 65% of those earning between $50,000 and $100,000 were living paycheck to paycheck in July, both up from a year ago

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Feds efforts to wrangle inflation has Mortgage rates at 7% hitting 21- year high

Mortgage Rate graph

Important Takeaways:

  • Mortgage rates surpassed 7% this week, hitting the highest level in more than two decades
  • That’s the highest point since the first week of April 2002 and marks just the third time rates have exceeded 7% since then. The last times were in October and November of last year, when the rate reached 7.08%.
  • The increase this week further deteriorates affordability for budget-conscious buyers who are facing elevated home prices and a shortage of choices because homeowners remain reluctant to sell and give up their lower mortgage rate.

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Gas prices going up in time for return to school

Gas Prices OPEC

Important Takeaways:

  • US gas prices climb to highest level in nearly 10 months
  • Pump prices are creeping towards $4 a gallon nationally.
  • The national average for regular gasoline hit $3.85 a gallon on Monday, according to AAA. That’s the highest level since October 19 and comes just weeks ahead of Labor Day weekend when millions of Americans will hit the roads.
  • …gas prices have climbed by 28 cents over the past month and 32 cents since the Fourth of July as a result of higher oil prices caused by Russia and Saudi Arabia cutting supply and extreme heat sidelining some US refineries.
  • According to AAA, there are now 11 states averaging $4 or higher, including Arizona, Illinois and Utah. Colorado and Michigan aren’t far away.

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Record rent soaring up 9.3% in Manhattan and 14% in Brooklyn

Manhattan Rent

Important Takeaways:

  • Rent in Manhattan soared to a record-high average of $5,588 in July, up 9% from 2022.
  • It’s hurting tenants struggling to find apartments they can afford. One apartment hunter said she can’t find a studio to suit her work-from-home needs for less than $5,000.
  • “I am considering not coming back to Manhattan,” she said.
  • “Rent went up at 9.3% in Manhattan. We saw it go up 14% in Brooklyn because now Brooklyn landlords are saying these people from Manhattan can’t afford it, how much can I raise my rent?” said Sanai.

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Wondering where your money went? Inflation has Americans paying extra $709 per month on regular household items

Important Takeaways:

  • Inflation forcing Americans to spend $709 more per month than 2 years ago: Economist
  • Scorching-hot inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent.
  • Moody’s chief economist Mark Zandi made the statement Friday on X, formerly known as Twitter, as part of his analysis of July’s consumer price index report. Despite the jarring increase in cost, Zandi say inflation is moderating, with just a 0.2% increase from June to July.
  • “To be sure, the high inflation of the past 2+ years has done lots of economic damage. Due to the high inflation, the typical household spent $202 more in a July than they did a year ago to buy the same goods and services. And they spent $709 more than they did 2 years ago,” Zandi wrote.
  • The fed could resort to further interest rate hikes later this year, but Federal Reserve Chairman Jerome Powell has not made any announcements.

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Here’s Why You’re Not Feeling Biden’s Booming Economy

Important Takeaways:

  • Inflation, unemployment and gross domestic product numbers are all giving Biden something to smile about.
  • Even though Americans are making more than they did before the pandemic, their money is getting them a lot less than it did two and half years ago.
  • While American paychecks are finally outpacing skyrocketing inflation, they have not been growing anywhere near as fast as prices have the last two and a half years
  • People don’t like inflation, even when their wages are up, Americans will focus on the slow pace of real wage growth, rather than real wage growth alone.

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Large percentage of Americans are living under financial strain

Important Takeaways:

  • 61% of Americans say they are living paycheck to paycheck even as inflation cools
  • Lower-income workers have been the hardest hit by price spikes, particularly for food and other staples, since those expenses account for a bigger share of the budget, studies show. Roughly three-quarters of consumers earning less than $50,000 annually and 65% of those earning between $50,000 and $100,000 were living paycheck to paycheck in June, based on LendingClub’s numbers.
  • Fewer top earners have been struggling to make ends meet. Of those earning $100,000 or more, only 45% reported living paycheck to paycheck, the report found.
  • A majority, or 52%, of adults, including high earners, said they have felt more financially stressed since before the Covid pandemic began in 2020, according to a separate CNBC Your Money Financial Confidence Survey conducted in March — largely due to inflation, rising interest rates and a lack of savings.

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Cost of putting food on the table continues to rise according to the latest report

Revelations 13:16-18 “Also it causes all, both small and great, both rich and poor, both free and slave, to be marked on the right hand or the forehead, so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name. This calls for wisdom: let the one who has understanding calculate the number of the beast, for it is the number of a man, and his number is 666.”

Important Takeaways:

  • As food prices rise in June, analysts warn of a ‘tipping point’ for Americans
  • Grocery prices were 5.7% higher in June compared to a year ago, and dining out was 7.7% more expensive
  • “Overall, there continues to be a similar narrative of extended upward pressure on food prices as we try to discern whether this stress has led to a tipping point where consumers are struggling to buy the foods that they want,” said Jayson Lusk, the head and distinguished professor of Agricultural Economics at Purdue University.
  • Reported food insecurity across households of different income levels reached 17% in June, the highest level since March 2022, according to the monthly Consumer Food Insights Report from Purdue University. Although it didn’t deviate too much from the normal range — food insecurity hovered at 14% two months ago — Lusk said the increase is concerning given the amount of pressure on more financially vulnerable consumers.
  • Around 47% of low-income households — those earning less than $50,000 a year — said they relied on SNAP benefits in May, up from roughly 40% in February, according to a recent Morning Consult report

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Pandemics, War, Trade Wars; the road ahead will be rough

Revelations 13:16-18 “Also it causes all, both small and great, both rich and poor, both free and slave, to be marked on the right hand or the forehead, so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name. This calls for wisdom: let the one who has understanding calculate the number of the beast, for it is the number of a man, and his number is 666.”

Important Takeaways:

  • Why It Seems Everything We Knew About the Global Economy Is No Longer True
  • “Nearly all the economic forces that powered progress and prosperity over the last three decades are fading,” the World Bank warned in a recent analysis. “The result could be a lost decade in the making — not just for some countries or regions as has occurred in the past — but for the whole world.”
  • A lot has happened between then and now: A global pandemic hit; war erupted in Europe; tensions between the United States and China boiled. And inflation, thought to be safely stored away with disco album collections, returned with a vengeance.
  • But as the dust has settled, it has suddenly seemed as if almost everything we thought we knew about the world economy was wrong.

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Organized Retail Crime has grown worse in an age of Elevated Inflation

Revelations 13:16-18 “Also it causes all, both small and great, both rich and poor, both free and slave, to be marked on the right hand or the forehead, so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name. This calls for wisdom: let the one who has understanding calculate the number of the beast, for it is the number of a man, and his number is 666.”

Important Takeaways:

  • Target CEO: We’re seeing ‘violent’ incidents in our stores, and it’s costing us millions
  • The retailer estimated in its earnings release Wednesday that inventory shrinkage — mostly the theft of merchandise — would clip profits by a whopping $500 million this year.
  • Factoring in an about $700 million profit hit from inventory shrinkage in 2022, Target is on pace to see $1.2 billion in profits go up in smoke, due primarily to organized retail crime.
  • “These concerns have grown in recent years, as criminal groups have become more brazen and violent in their tactics and are using new channels to resell stolen goods.”
  • Nordstrom (JWN) recently followed Whole Foods in exiting a key location in San Francisco, citing concerns over worker safety.
  • Independent news site The San Francisco Standard has tracked 20 closures of household-name stores in the city since 2010, including Office Depot.

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