Jenn Lueke, a 27-year-old recipe developer based in Boston, has been creating content online to show people how to eat well on a budget. With the rising costs in various areas, including groceries, Lueke aims to empower individuals to take control of their food costs. In a survey by CNBC/SurveyMonkey, 65% of U.S. adults stated that inflation is the main source of their financial stress, with nearly half feeling like they are in a worse financial situation compared to five years ago. Lueke started a series on social media where she turned grocery lists ranging from $50 to $75 into five different recipes for families, highlighting that it is possible to eat well while cutting down on costs.
Lindsay Owens, the executive director of Groundwork Collaborative, pointed out the difference between disinflation and deflation when it comes to the economy. Disinflation occurs when inflation rises at a slower rate, while deflation results in prices decreasing, usually during economic downturns. The concept of “money illusion” comes into play, where individuals do not fully acknowledge the level of inflation in an economy and believe that the value of a dollar remains constant over time. Despite reports of inflation easing, many Americans have not noticed a decrease in prices, as prices tend to rise more easily than they fall.
Concerns have been raised about the record-high total credit card balances in the U.S., reaching $1.08 trillion in the third quarter of 2023. Nearly half of Americans with credit cards carry a balance from month to month, indicating potential financial struggles. Although wage increases have been observed since January 2022, the pace of the increase has slowed, with wages barely keeping up with rising prices. This raises questions about the discrepancy between wage growth and consumer experience, as experts predict that the gap between inflation and wages may not close until the fourth quarter of 2024.
The cycle of money illusion plays a role in individuals’ perceptions of inflation and monetary value. Some people fail to recognize the impact of inflation on their purchasing power, leading them to believe that the value of money remains consistent over time. This misconception can contribute to financial challenges, especially for those carrying credit card balances and struggling to make ends meet. As retail sales and consumer spending continue to increase, experts emphasize the importance of understanding the dynamics of inflation and its effects on personal finances.
For many Americans, wage growth has been long overdue, with stagnant wages or minimal raises being a common experience. Despite some wage increases, the pace of growth has slowed, and the gap between inflation and wages is projected to persist for several more quarters. As individuals navigate the challenges of rising prices, understanding the factors contributing to inflation and economic conditions becomes crucial. By empowering individuals to make informed financial decisions and budget effectively, it is possible to mitigate the impact of inflation on everyday expenses and maintain financial stability.
