Americans are facing what Bloomberg Economics has dubbed an “inflation tax” of $5,200 per year.
Although a report from Bloomberg noted that savings accrued during the pandemic might cushion that for some Americans, it also noted that as money in the bank dwindles, more Americans will hunt for jobs, which could “dampen wage growth.”
Inflation emerged in March as the top economic problem facing the nation, according to Gallup.
The polling firm found that in March, 17 percent of those surveyed ranked inflation as their top economic concern, up from 8 percent in January.
Joe Biden and the Democrats’ out-of-control spending has resulted in CRUSHING inflation on the American people. pic.twitter.com/3BhDBbTn4M
— Ted Cruz (@tedcruz) March 29, 2022
The company found that inflation did not rank as the top concern of Americans, however. The top concern was the category of “the government/poor leadership,” which was cited by 22 percent of those responding as their top concern.
Rob Kapito, the president of Black Rock, a financial firm, said young Americans are likely to feel the impact of inflation the most.
“For the first time, this generation is going to go into a store and not be able to get what they want,” he said recently, according to MarketWatch. “And we have a very entitled generation that has never had to sacrifice.”
Can the damage done by inflation be easily reversed?
In looking ahead, Kapito urged consumers to “put on their seat belts,” as America faces what he termed “scarcity inflation.”
“Fiscal support measures designed to counteract the severity of the pandemic’s economic effect may have contributed to this divergence by raising inflation about 3 percentage points by the end of 2021,” wrote Òscar Jordà, Celeste Liu, Fernanda Nechio and Fabián Rivera-Reyes in the San Francisco Fed’s weekly Economic Letter.
This is Bidenflation. SF Fed chart literally shows the impact on inflation of Biden’s $1.9T 3/21 gov’t spending spree. It shows US inflation vs that in Canada, Denmark, Finland, France, Germany, Netherlands, Norway, Sweden, & the UK – the chart ends before Russia invaded Ukraine. pic.twitter.com/aEJyglsI0Q
— Andy Puzder (@AndyPuzder) March 30, 2022
“If the high-income consumers are out buying, we won’t see a big impact on raw consumer activity,” Zandi said.
Low-income Americans “are living paycheck to paycheck but have not had to pull back on spending yet, but that is coming,” Zandi said.
Zandi offered his suggestion of how to spot when lower-income households are in trouble.
“Look to the discretionary items and spending on meat, steak, start to come down, or you start to see less dining out at restaurants that cater to lower- and middle-income households, the chain restaurants,” Zandi said. “When they are trading down in various consumer items, that’s the real tell.”