Inflation is especially taking a toll on lower-income families, who spend roughly a third of their earnings on essentials like food and energy, according to this report by Amelia Pollard and Olivia Rockeman.
It’s eating into recent wage increases, and the timing couldn’t be worse after federal pandemic relief expired for about 7.5 million people.
“Anything that in the very short run puts a lot of pressure on family budgets across the board will cause more stress and damage to low-income households because they just have less scope to absorb it,” said Josh Bivens, director of research for the Economic Policy Institute.
A majority of Americans flush with over US$2 trillion in excess savings accumulated during the pandemic are ready to splurge on gifts and holiday trips.
At the same time, more than 11% of Americans don’t plan to spend at all, the greatest share in at least 10 years and more than double that in 2020, according to a Deloitte survey.
And the Salvation Army is bracing for a holiday season similar to that after the 2008 financial crisis, according to National Commander Kenneth Hodder.
Nery Peña, a first-grade teacher and single mom of two in Washington, DC, says the child tax credit and stimulus checks were a lifeline this past year.
While she’s received around US$500 a month since July, the next tax-credit payment due around December 15, this year will be the last one unless Congress passes the social-spending package, and she’s already started to curb her spending.
“Food prices are going up, gas prices are going up — prices are going up everywhere,” said Peña. “Thank God my daughters understand, but as a mom, it just sucks to tell your kids Christmas won’t be that Christmassy this year.”
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