Thursday, August 14, 2008

Recent headlines on the state of the economy

Higher inflation brings lower standard of living
With prices up and wages flat, consumers have to make do with less

"After adjusting for inflation, the average weekly paycheck dropped by 0.8 percent in July from June, extending an ongoing slide in real income. That left real earnings 3.1 percent lower in July than they were a year ago"

"Faced with higher shipping costs and pricier plastic, consumer products companies like soft drink maker Dr. Pepper Snapple Group have raised prices — even as sales have fallen."

"Some companies that haven't yet passed along higher costs are having trouble holding the line. Some 38 percent of small businesses surveyed by the National Federation of Independent Business said they plan to raise their prices in the coming months..."

"With the economy shedding jobs and unemployment rising, it’s a tough time to ask for a raise. That means that – unless your paycheck is growing by 5 percent a year – you’re actually taking a pay cut. "

"During the prolonged inflation of the 1970s, house prices also rose rapidly. But today, consumers’ budgets are also being squeezed by falling equity in their home which, until recently, was a critical source of spending power"

Consumer Prices Shot Up in July

"Consumer prices shot up in July at twice the expected rate, pushed higher by surging energy and food costs. The latest surge left inflation running at the fastest pace in 17 years."

"...labor market remains under severe stress from the weak economy"

"Energy prices jumped by 4 percent last month, driven upward by a 4.1 percent rise in gasoline prices. In July prices at the pump were 37.9 percent above where they were a year ago"

The moral of these headlines to me is that this mess is not going to clear up any time soon and each person/family has to make the consious decision to change their behaviors that have to do with spending. Each family is different in how much or what they need to change. For my family I am currently focusing on our food budget- both eating out and groceries and electricity which you can see what we are doing in my previous post. My adventures with my food budget are chronicled at my other blog http://cheaphealthygoodlife.blogspot.com/ . We also just moved closer to my husbands job to decrease his commute from 70 miles each way to 20 miles each way and he also carpools 3 of the 4 days a week that he works.

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