By Chuck Warren
What is inflation in simple terms?
According to the International Monetary Fund it is “a rate of increase in prices over a given period of time.” You really don’t need government to tell you it is there – you see and feel it in your pocketbook.
It is akin to Supreme Court justice Potter Stewart characterization of pornography in Jacobellis v. Ohio, 1964 when he wrote “I know it when I see it.”
Biden and economist do not seem to get that. What are you going to believe? Their carefully crafted stats or your stinking, lying eyes?
No matter what rhetoric Biden and his press allies feed you, you know that inflation is high and not abating in a way to help your household budget.
Another example how inflation is hurting working Americans came for CNN this weekend. They reported Saturday that “it will cost you 19.5% more to repair your car then it did a year ago according to the July Consumers Price Index. Another hefty car expense is car insurance, up 17.8% from a year ago.”
Want a real-world example? Just this morning, I had a friend who was getting new car insurance and it cost her $35 more a month which equals $420 more a year. That affects her household budget. That is real inflation that Pres. Biden is not considering.
These household inflationary pressures have a ripple effect.
Let us use my friend’s auto insurance increase. How do most working Americans and families come up with these additional dollars? We know since 2015, 60% of Americans would have a hard time coming up with $1,000. This means only 40% of Americans have enough savings to cover $1,000 unexpected expenses without going into debt.
God forbid your unexpected expenses go over $1000. According to Yahoo Finance, only 9.20% have savings of $5000.
Thus, if you are lucky enough to put a little money aside, and can use it for 2023 expenses, what do you do in 2024? Most cannot replace their emergency savings because inflation has eaten it.
So, the ripple effect is most people are pulling out the credit card for these price increases without taking away from their food and gas budget. Which means they are going further into debt and paying.
And what is the average credit card interest rate? The average APR for all accounts in the second quarter of 2023 is 20.68%. That's a significant increase from the first quarter, when the average was 20.09% (in the quarter before that, it was 19.07%.).
Hence, car repairs have gone up 19.5% and car insurance up 17.8% from a year ago. Add those new expense to your credit card bill which has an average interest rate of 20.68% and folks … inflation is kicking your butt.
The funny thing about this CNN report, was the headline tried hard to immerse it with some good news, “Inflation may be cooling — but drivers can’t seem to catch a break.” There is always a spin to help their favorite politician.
Again, you know inflation when you see it. No matter the press spin.
This Biden Inflation and the tools used to cover your same basic standard of living has a ripple effect. Higher monthly payments. No money for savings. An uncertain financial future. It’s real and it will last for years.