#economy #wages #prices #PerceptionOfEconomy #EconomicData The data show the economy is good, even robust. But people don’t always see it that way. They see prices that are higher than a few years ago on almost everything. So why the difference between data and perception? First, almost everything costs more than a few years ago for a few reasons. First, some companies are trying to make up for their losses during the pandemic. Some may call that price gouging, but it becomes that only when prices stay up AFTER the losses have been made up. Secondly, almost everyone is getting paid more than they were a few years ago. If you are not in this category, look around for other opportunities. They are out there, in many places. To help pay for those higher wages, companies raise the price of what they sell or make. There are certain categories of prices that have unique issues. Housing (rents and purchases) prices are up. There are lots of entities out there competing with individual families for housing. They buy properties for cash and rent them out at rents that are often unaffordable for many. That takes many houses off the market for individuals, and raises rents for renters. Auto insurance and repairs are another unique category. Today’s cars are a lot more complex than those from the past. What may look like a simple repair gets complicated because systems in the cars may have to be recalibrated. That could double or triple the cost of a simple repair. The same could be said for home repairs. That may be why repair insurance companies have a market, and why auto and homeowner’s insurance in general have risen in price. No matter who serves in the U.S. government, he or she can only do so much to bring prices down. The good news here is that if you are making more money in your job, most data show that your higher pay is outpacing inflation. That begs the question: would you prefer lower pay and lower prices, or the current situation? Before answering that, know that the data again shows price inflation coming down. We may never see $1 a gallon gasoline again. Those pandemic prices, when no one was going anywhere, may not return unless there is another pandemic. No one wants that. Food prices are also affected by distributors, who are raising their prices. Also, one has to consider climate issues that affect the growth of what we eat. If food can’t grow as well, or gets destroyed in storms, what is not affected is going to be more expensive. Therefore, be skeptical of anyone who runs for public office who says he or she will lower prices. There may be things they can do to mitigate inflation, but the government can’t subsidize everything, and it has limited ability to force producers and sellers to lower prices on what they make or sell. The main thing that will affect pricing is whether people buy things at the price charged. Some necessities have to be bought, but we may want to try to use less of those if we can. The government can lower your taxes on certain things as one mitigation. But, the government can’t control pricing, nor do we necessarily want it to. Certainly, your parents or grandparents paid less to live in their younger years than you do now. But, in that time, much progress has been made. Society, as a whole, has seen much improvement. The betterment of society comes at a price. Most of us do not want to go back to the “good old days.” Peter
#inflation #prices #shopping #rent #gasoline #groceries If something costs too much, don’t buy it. That can’t be said for everything, since we all need housing (rents), fuel for cars (gasoline), medication and food (groceries). But, according to Christopher Rugaber, business and economics reporter for the Associated Press, companies are starting to lower their prices because people just aren’t buying their products in the volume they would like, at the prices they want to charge. Apparently, it’s working. Last week, inflation dropped below 3 percent for the first time since 2021. Rugaber’s article on the subject was published August 13, 2024, in The Atlanta Journal-Constitution. Before Rugaber’s article, McDonald’s reportedly started lowering their prices on some of its most popular items because there were too few diners at many of their restaurants. It showed in their earnings report. It’s good also to remember that government has little leverage in bringing down prices. It can do what it can for things it can regulate, such as bringing down the cost of insulin to $35 for senior citizens. One big lever they have is allowing Medicare to negotiate prices. This has helped bring down the government’s cost for 10 popular drugs. But, what really helps bring down prices is the lack of buyers. It’s simple economics. Set a price, see whether the market will bear it and adjust as the market adjusts. For businesses, particularly small businesses whose product is not an absolute necessity, it’s a much tougher decision. Usually, these businesses know what prices the market will bear for their finished product. But, can they produce that product at a cost that not only covers what it costs them to make it, but also puts a little profit in their pockets? It’s a struggle for some of these businesses, many of whom are facing labor shortages. When workers are few, they will demand higher wages. Can these businesses keep their workers happy, pay for ingredients that produce high quality products, pay for their workspace AND make a profit? The bigger corporations have more pricing flexibility. If they, like McDonalds, see less traffic in their retail spaces because of prices, they usually can adjust to that more easily. Sometimes that doesn’t work well for some of those who work for them, since labor is one of the places that corporations adjust. In all, reports say that, given the labor shortage, most workers have seen their pay rise. A lot of the things we buy are priced higher to pay workers more. In most cases, workers’ raises are more than the price increases they are paying for necessities. As Rugaber’s article implies, consumers are working hard at changing what markets will bear – whether they realize it or not. So, here are some handy rules for buying: If it is something you need to survive, try to use less of it. (Don’t drive around in a 4X4 pickup truck if you don’t need to haul anything). If it’s something you want badly, but don’t absolutely need, look for bargains. It may not pay to drive five or six miles to save two cents on a gallon of gas, but it might make great sense to shop around if you’re in the market for, say, a big-screen TV. Another rule: don’t long for the days of the pandemic when prices on just about everything were lower because people weren’t going anywhere. The disease was too much of a cost just to have lower prices. (By the way, the air was also cleaner during the pandemic, but that’s a story for another day). Inflation ultimately adjusts when fewer people buy. So, work hard at your job, make as much as you can and try to spend carefully. Also, try to pay yourself first by saving a little of that paycheck for your future. Peter
