Impacts of Inflation on Individual Lives in the U.S.

Since the pandemic, the U.S. consumer price index (CPI) has continued to rise, and U.S. inflation has been evident. The Associated Press pointed out that due to rising gasoline, food and rent prices, households have shrunk and forced the Federal Reserve to raise interest rates. This trend is increasing the recession risk. According to the US inflation data released by Statista on August 26, the inflation index of July increased by 8.5% year-on-year, which is good news, compared with 9.1% in June, and the inflation rate is under control. But inflation figures still remain at a high level. High inflation is not a good phenomenon in economy, and there are also some impacts of the current economic situation in the United States on people’s lives, as six points below. 

1. Tend to work from home

During the epidemic, in order not to affect the normal operation of enterprises, it is common to work from home, which cannot be changed due to objective factors. Except for some companies that already have a WFH policy, there are more companies that are trying this working model for the first time. For those who do not often work from home, after experiencing this style, they believe that staying at home can better accompany their children to grow up and take care of their families, which is also economical. For those who go to work, it will undoubtedly save a lot of money for commuting, dining out, and entertainment, which is equivalent to earning money. There are some additional benefits, such as some people say it is easier to concentrate at home, and work from home is much less stressful and anxious than the noisy work environment of the office. That saves money on seeing a psychiatrist to some extent.

2. Choose a side hustle

Inflation brought by the epidemic in the United States is daunting, while the economy is down. In addition, corporate funds are tight, and wage growth lags behind inflation, and people’s living standards have fallen sharply. According to a survey conducted by American coupon site CouponBirds, from December 2021 to May 2022, people’s demand for freelance jobs has surged, and although the traffic on the freelancer platform fluctuates in terms of data, the overall trend is on the rise. Because the impact of the epidemic on income has prompted people to work part-time to support spending.

3. Cope with rising food prices

Food prices rose 14% year-on-year in July as CPI rose, and the price of eggs in U.S. grocery stores has soared 47%, which is prompting people to change their eating habits, the way and types of food purchases to reduce the corresponding expenses. For example, rising meat prices have prompted them to buy vegetarian and dairy products, or to buy fewer snacks, and to use less meat when cooking. Other consumers tend to buy promotions, choose cost-effective brands, and use more coupons and discounts on groceries. Because the price of almost everything has gone up, many people are cooking up and eating out less.

4. Difficult to buy a house

Since the pandemic started, the ultra-loose monetary policy launched by the Federal Reserve System and several rounds of fiscal stimulus plans have not only injected a huge amount of funds into the market, but also boosted US housing prices to rise sharply. According to data released by the National Association of Realtors in July, the sales in July 2022 were 4.81 million, and the median sales price is $403,800 and the inventory is 3.3 months. Median selling prices rose 10.8% year over year, and inventories rose 0.7 months from July 2021. Home sales prices have continued to rise since the pandemic, making it even more difficult for American households with limited savings to buy a house.

5. Face increased personal financial risk

Credit card debt, which had fallen in the early days of the pandemic, is rising, and the pressure on residents will increase to repay debts now. Because wage growth of individuals has been lagging inflation for several months. In turn, it may lead to the risk of financial turmoil and large-scale debt defaults. The financial risks faced by the US economy will also go up accordingly. The data also show that people with lower credit scores are particularly bad at defaulting on auto loans. While unemployment remains low and the overall economy remains strong, hunger indicators are rising. 

6. Energy shortages lead to higher oil prices

The most serious inflation in the United States in recent 40 years and the high consumption cost caused by the energy shortage in the world have made the price of gasoline continue to rise. Coupled with the conflict between Russia and Ukraine, the energy supply situation will continue tightly. The US Energy Information Administration (EIA) shows that the average spending of a U.S. household will reach $2,945 on gasoline in 2022. If gasoline prices continue to climb next year, U.S. household gasoline spending could increase to $5,000. With oil prices running at a high level, a large number of Americans choose to drive as eco-friendly as possible, and only choose to drive a car when they need to go to far places. The high oil price is really frightening for civilians.

Inflation and CPI rises will still have an impact on the lives of Americans in a short period of time. Returning to normal levels through correct policy regulation and bringing people back to their pre-pandemic consumption conditions should be what many Americans want to see and expect! At least they can drive to where they want to go and buy their favorite food categories in the supermarket with an affordable price, etc.