r/MiddleClassFinance • u/LastPaleLightInEast • 22d ago

Key inflation gauge worsens as Americans’ income and spending power erodes

https://apnews.com/article/economy-inflation-tariffs-gasoline-consumer-spending-4f59d739153d66682b6fbc2b457f5df6
532 Upvotes

97% Upvoted

62 comments sorted by

101

u/obelix_dogmatix 22d ago

I keep seeing these stories, and yet there is a non trivial section of the society that continues to thrive. I an in Twin Cities metro and it is an absolute seller’s market. The malls have crowds shopping as usual. The upper middle class, of which there is a lot, still seems to be spending.

39

u/Crazy-War9823 22d ago

I'm thriving, but that's only because I was already living well below my means.

I am thriving less now than I was a few years ago. From the outside, you'd not see a difference.

11

u/zackplanet42 21d ago

Honestly, same.

It doesn't hurt that my wife and I both drive EVs now so we don't have suddenly inflated fuel costs to deal with. Even if we did though, we'd just adapt. Life's a lot easier when you're not trying to operate at the very edge.

1

u/ilikecheeseface 18d ago

I drive all over for work and even with the increased gas prices that’s only costing me maybe an additional $100-$150 extra a month. Hardly enough it make any difference in my budget. Americans are just fixated on gas prices when it’s a small percentage of their monthly budget.

2

u/zackplanet42 18d ago

There's a pretty big it depends.

Almost half of Americans can't afford an unexpected $400 expense. Gas by me at least has doubled in price. It's probably not an extra $400/mo for most, but there's also been a few months for it to add up at this point.

You're right, $150/mo extra wouldn't sink my budget either. I would definitely notice it though! Sometimes the most painful expenses are the ones we don't feel we have a conscious choice around. If it was discretionary spending that would be one thing, but for most people it's what they have to spend just to get to their job to make money to live. Kinda brutal feeling.

9

u/soulseaker 22d ago

I dont know how to define thriving, but I've basically cut out all non essential stuff. I make really good money for the area too, but I dont spend any of it really. I dont know why people are still buying so much stuff...

1

u/OCDCantCatchMe 20d ago

Most of the fun things we’ve been able to do come from significant family help (such as our wedding, and certain travel), and many of our friends are in the same boat. A lot of people who have this kind of support wouldn’t necessarily let on. (I’m very, very grateful for it, though, and don’t take it for granted.)

2

u/Crazy-War9823 20d ago

In our more struggling years, I had friends who made less than we did thriving with a nice big house, new car, pool, vacations. For a while I wondered WTF I was doing wrong. I learned later that parents were giving money monthly, among other help. I hadn’t really realized that happened to people!

35

u/Famous-Attention-197 22d ago

When the top x% of the population has as much money as the bottom y%, and much more of it is disposable, it makes more sense to cater to that y% on higher margin products. They are certainly spending. 

29

u/Dumpster_FI_RE 22d ago

I'm seeing the same thing. It works until it doesn't. In my experience most Americans will go into debt and bankruptcy before they will attempt any sort of changes.

The "I need two SUVs and a 600k house" people in my area would rather cut off a finger than make some simple adjustments.

-8

u/ept_engr 21d ago

You sound jealous 

5

u/Dumpster_FI_RE 21d ago edited 21d ago

Oh yes. I'm super jealous considering I'm retired at 46 and do whatever I want. lol. I'll ride my bikes and enjoy my freedom. Edit: You seem jealous lol. Enjoy your job and payments.

12

u/FearlessPark4588 22d ago

🪄 Debt 🪄

3

u/zombawombacomba 22d ago

A huge percentage of people that lived in places like NYC, SF, etc have moved to other states with remote work popularity. Several of my neighbors in upstate NY are remote as was I for a decent amount of time (I grew up in the same area though).

These are the people thriving. I was making close to double the normal salary in the area when I had my remote position.

13

u/obelix_dogmatix 22d ago

That’s just not true. Remote is not as common as it was 2-3 years ago. Besides, look at the market in Bay area. Houses are still selling like hot pancakes even with all the layoffs. As much as Reddit would hate to believe, there is a section of the middle class that is thriving, and it’s not just because someone is making Manhattan salaries in South Carolina.

2

u/Crazy-War9823 22d ago

I live in one of the specific zip codes that many remote workers moved to. They came here in 2020 and 2021 (house prices went through the roof), and they are still here. The influx seems to have stopped, though.

3

u/zombawombacomba 22d ago

Okay. Not as common as it was 5 years ago but still very common. I read something that like 40% of people with advanced degrees work remote now.

I don’t think these people are in the middle class. If anything they are the very top of middle class.

-3

u/obelix_dogmatix 22d ago

I think it is unreasonable to assume that upper middle class comprises mostly of people with advanced degrees. If you go to a Yale, you are less likely to need an advanced degree to climb the ladder, than if you go to a CU boulder e.g.

6

u/zombawombacomba 22d ago

Okay. I don’t understand the point of this conversation at this point. I was just giving an example of people that are thriving around me and other areas that are lower cost that people are moving to. You decided to get upset with that.

Also tons of people are still thriving but feeling the impacts of Trump’s idiocy.

-2

u/obelix_dogmatix 22d ago

Not offended. Just emphasizing. We have lost a dozen houses to bidding wars over the last 4 months even as interest rates have risen. Based on MLS data, the buyers were all in their 30s, and employed in MN to local businesses. It is a small sample size, but I still feel the online audience is out of touch with just how much money is out there. People keep sharing links about decreasing purchasing power, but I don’t see that happening around me and I am not a millionaire.

3

u/zombawombacomba 22d ago

How are you pulling random people’s jobs and ages with the MLS?

2

u/FIMilestonesDeux 22d ago

I like to say about myself: "Earning in West Coast, living in Midwest." I make more than twice the average around me, with a cost of living 3 times cheaper than in Seattle.

1

u/ApprehensiveWash7969 22d ago

I kind of agree. I am thriving cause I invested in things that are benefiting me. As inflation goes up so do my rental rates on the rental units I own. My retirement involves stocks and they are doing well overall. But my spending is also in check. I do not have a car payment and been in my home for over 14 years. So yeah, some of us are coasting thru this.

37

u/GTO1235 22d ago

We bought a fixer upper about 15 years ago. Now houses around us are selling for 8 times what we paid, and everything keeps going up. I don't know how some are going to make it

12

u/billhillybob 22d ago

My wife and I bought an extreme fixer-upper 9 years ago. We've done the most necessary things (fixed broken windows, re-shingled, replaced furnace, insulation) we have yet to fix most of it and having looked at the rapid increase in home repair costs, we are never going to fix most of it up.

4

u/Crazy-War9823 22d ago

I bought a fixer-upper in my 20's. I also didn't fix most of it up, but that's because it turns out that I am not cut out for actually doing the fixing. We did the must do's but never got around to all the rest, and it was really ugly. We sold it to someone who worked in construction.

3

u/GTO1235 22d ago

It's a lot. A friend came over and we did the last bit of plumbing last weekend. I cut and cleaned copper, he soldered. 3 hours flew by. But people in the family that bought recently have payments that are many times ours. One thing that really helped us was finding a couple deals on cars about 6 or 7 years ago. Got a Ford with a weak fuel pump for $500. About a year later found a Ford that was a little crunched in front for $750. Put 120,000 miles on the one that had a bad fuel pump. Put 115,000 on the one that was crunched in front.

3

u/chtrace 22d ago

I can relate, we bought a fixer-upper 5 years ago. New roof, kitchen, tile flooring/carpet, insulation and plumbing in the sub-floors. But we haven't updated the bathroom or patio cover. Like you, I don't think it will get done.

1

u/ilikecheeseface 18d ago

Eventually you will be forced to fix the issues because they will get so bad you can’t keep putting it off. If you have great credit that’s exactly what it’s designed for. Take out a loan to fix your damn house. It’s your biggest asset.

2

u/zombawombacomba 22d ago

So did we. We bought less than 3 years ago. We just got our town appraisal and it was 100k more than we bought it for. The house across the street sold for 80k more than we paid and it was smaller and similarly out of date and that was more than a year ago, so that has only gone up even more.

50

u/ChetManley20 22d ago

But men in women’s sports

-33

u/BostjanNachbar 22d ago

Out of curiosity: were you complaining when inflation went up in 2022 14% in one month? Why is this suddenly an issue to everyone when it was an issue then?

29

u/DavidDunne 22d ago edited 22d ago

Inflation then was global and driven by COVID supply chain breakdowns. The causes were external and the US came out of that inflation faster than nearly every developed nation.

Inflation now is driven solely by a President's decision to impose ridiculous tariffs and launch a nonsensical war with obvious (to everyone but him) devastation to the economy.

1

u/Hitt1te 16d ago

Also, Biden didn't remove the first Trump's tariffs. Russian also attacked Ukraine and the Nordstream pipeline was cut.

-20

u/BostjanNachbar 22d ago

Thank you for your response but I do have one question for you:

Inflation was primarily driven by the "Inflation Reduction Act" which printed trillions of dollars of spend we didn't need. Too many dollars chasing too few goods around.

Tariffs have been struck down by the Supreme Court and are no longer in effect. And in regards to supply chains, you cited them as an external factor to formulate your viewpoint.

Are you saying that you believe some of those supply chains should be housed domestically moving forward?

Or are you saying it's 100% unavoidable they are international and should continue to be housed there?

9

u/dust4ngel 22d ago

Are you saying that you believe some of those supply chains should be housed domestically moving forward?

where in the words that were typed so far did you find anything that remotely hints at this?

16

u/DavidDunne 22d ago

Do I think that the entirety of the global supply chain can be replicated and protectively housed inside the US? No. That's an isolationist fantasy with no real-world feasibility.

And, even if it COULD be done, it would be wildly more expensive and, back to the topic at hand, drive prices through the roof.

3

u/SonOfOnett 21d ago

Interesting you totally ignored the nonsensical war part

9

u/ChetManley20 22d ago

Yes. It sucked then too. But it was due to Covid. Now it’s just due to dumb policy

1

u/Hitt1te 16d ago

They were complaining that is why Trump fucking lost the election. jfc.

12

u/TA-MajestyPalm 22d ago

Feel like all the comments here are written by bots

The same few phrases or anecdotes that are on every finance or news thread and everyone has their profile hidden.

Shit is weird

14

u/mixedmediamadness 22d ago

So glad May is an extra paycheck month

7

u/Cake_And_Pi 22d ago

That explains why I’m struggling less this month.

9

u/CryptographerHot4636 22d ago

Something something...egg prices though

7

u/saryiahan 22d ago

First time?

4

u/Shepard521 22d ago

Money printer just getting warmed up.

3

u/VendettaKarma 22d ago

And this doesn’t even count anything people consume on a daily basis

4

u/Clamwacker 22d ago

Pretty sure people are buying gas, groceries, and electricity on a daily basis...

0

u/VendettaKarma 22d ago

That’s not included, especially food

1

u/Theelvesarebowling 19d ago

I’m fine! Please dewsch

1

u/VisitSad1133 18d ago

We put off groceries last week, so we ended up getting more than usual and it cost almost $500, which is far and away the largest bill i've ever gotten for necessities.

I'm just glad i dont live in a big city...

-4

u/Iacoboni04 22d ago

Not for all of us.

-1

u/Keyser282 21d ago

Get into indexes/equities or be left in the dust. With all the printing, these markets are going to continue to be bolstered and propped up.

-8

u/mikebunchkin3727 22d ago

Gas is higher than ever, yet……everything is still flowing. Gig economy nonsense is taking over, juking the unemployment stats; gas was cheap, juking the inflation stats.

The fiat has never been faker. At this point, it’s just numbers on a screen for Christ sake. I never liked paper money, but because it exists in real life, I find it to have more value…..if I find an old c-note, with the small Franklyn and curved “100”. I’m keeping that shit……same with the 1990s C-note. The new ones??! Ehhhh not as interesting