Burning Extra Dinero? Here’s Why!
Why is everything so dang expensive? No doubt this was the #1 topic at every carne asada this past weekend. Seems like everyone has a story about how they’re paying so much more for things all of a sudden. Your abuela probably even showed you receipts. Literally.
So, what’s the reason for all this? Within the last year, work wages increased 5%. That’s good, right? We should be celebrating and dancing to cumbias with our prim@s. Guess again. Due to the war in the Ukraine and the ongoing pandemic, inflation has also increased. And it’s moving fast. Because of this, it’s almost as if we’re getting a pay cut rather than a pay raise. Actually, make that a 3.5% cut!
Want proof? Here you go:
The latest inflation report shows prices shot up by 8.6% for the year ending in May. So now we are having to spend an estimated $460 more every month than we did at this time last year to pay for the exact same goods and services, according to Moody’s Analytics.
An extra $460 a month!!! (Insert horrified telenovela scream here).
Just think of all the things you could be buying with that extra dinero. Or better yet, think of the investing or saving you could be doing with it. And to make matters worse for those who are employed, the Federal Reserve (aka Fed), has embarked on a rate-hiking campaign aimed at not only taming inflation but wage growth, too.
So, when will this all end?
The Fed says the outlook is cautious, yet hopeful. Hey, we’ll take that! They are looking very closely at the next couple of months to really control the problem. Pero the Fed is in a very delicate position, como when you have to decide which amig@ to take to the Bad Bunny concert. And as the Fed raises interest rates to control inflation, it needs to try not to push the economy into a recession. Ay, it’s like playing a stressful game of Jenga.
On June 22nd Wednesday, the Fed committee said in its statement it was “strongly committed to returning inflation to its 2% objective,” hinting that more aggressive interest rate hikes are not off the table.
The Fed also said it does not expect inflation to decrease this year and sees unemployment rising to 3.7% in 2022, higher than its March prediction. So, looks like we might be in this for the long haul, chic@s. Also, if inflation doesn’t start to chill in the next couple of months, we may start feeling even more financial pain.
So for now, we should hope for the best. Ay, if only everyone could light a white candle (they even sell them at the Dollar Store)… or rub vaporub all over the economy or something. Mmm pues, guess we just got to hang in there and save where we can. Fortunately your amig@s at SUMA Wealth can help you with that!
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