By sunrise, Patrice Stinney is whipping up lattes at a coffee shop. At dusk, she’s scurrying around as an airline customer service agent at Phoenix Sky Harbor International Airport.
In whatever “spare time,” Stinney’s also a part-time hairstylist, longing to own a beauty shop. But she recently moved in with her older brother, leaving her apartment of four years because of a rent hike. Despite having three jobs, Stinney struggles to make ends meet.
“Everything costs so much. Food is high. Gas is high. It’s really hard for me,” Stinney, 40, of Goodyear, Arizona, said after a recent 14-hour workday. “I can only imagine what people with a family and kids must be going through.”
As Americans look ahead to another Independence Day and a likely contentious 2024 presidential election, many are feeling fiscal pain as the prices of food, shelter, health care and transportation climb higher than their paychecks. About 52% of Americans participating in a USA TODAY/Suffolk Poll said the United States is too expensive to live in. And about 7 in 10 Americans said stifling inflation and the economy are the nation’s top problems today, according to a new Pew Center survey. A majority across age, gender and race told Pew that inflation is “a very big problem.”
“Their spending power has been minimized,” said Gene Ludwig, former head of the Comptroller of the Currency, a U.S. Treasury Department bureau.
America’s economic state is uncertain
What’s America’s economic state? Frustrating and uncertain. The typical American household spends about $768 more monthly on goods and services these days compared to 2020 because of high inflation, said Mark Zandi, chief economist of Moody’s Analytics.
Meanwhile, as the United States skirts a recession, Zandi said some Americans seeking relief are also dipping into their savings for survival. Around 25 million Americans are behind on their credit card, auto loan or personal loan payments, according to a recent Moody’s/Equifax data analysis. Also, the delinquency rate for bank credit cards was 3.27% in May, nearly 2 points higher than in 2021, Zandi said.
“The economy is struggling due to these ongoing battles,” said Zandi, who gave the U.S. economy a B-minus grade. “If you ask the typical American, I think they feel uncomfortable. The good news is many people still have jobs and wage growth has been solid, but it’s not enough to feel good about shelling out more money for basic needs.”
US economy trying to find ‘better balance,’ economists estimate
Zandi’s theories echo a Brookings study this month by former Federal Reserve Chair Ben Bernake and former International Money Fund chief economist Olivier Blanchard titled, “What Caused the U.S. Pandemic-Era Inflation?”
They wrote that the Fed and many forecasters didn’t expect “mismatches” of a strong job market while the interest rate spiked. “Together, these shocks to prices given wages would prove to be the critical triggers of the rise in inflation,” the economists said. Bernake and Blanchard said lowering the current inflation rate of 4.05% to the Fed’s preferred 2% target requires a better balance.
Ludwig, the former comptroller, said the Fed has relied too long on inflation data such as the consumer price index to assess the impact of the nation’s economy accurately.
“We have to find new tools to tame inflation because when you raise interest rates, those who get hurt the most are low- and middle-income Americans,” Ludwig said. “It’s disproportionately painful and unfair.”
First-time homeowners struggle to buy houses
Housing demand remains high across the United States, but the market has cooled since the 2020 pandemic-prompted sales boom because of high 6% mortgage rates and inflation. As many Americans see homeownership as a traditional way to generate wealth, fears over banking industry instability, increasing job layoff concerns and a possible economic recession mean gridlock is growing from homebuyers reluctant to purchase and owners wary to sell.
Throw in a low inventory of affordable homes, and the future looks bleak, especially for would-be first-time homeowners. Around 75% of Gen Xers, 80% of millennials, and 66% of Gen Zers advise against making a home purchase in these conditions, a survey from real estate company Truehold reveals.
“The market is recalibrating,” said Bess Freedman, CEO of real estate firm Brown Harris Stevens in New York City. “We’re thirsty for housing.”
Converting vacant offices, schools and malls into housing could be a possible solution, said Jessica Lautz, the National Association of Realtors’ deputy chief economist. It’s still “a seller’s market,” as the ratio of first-time homebuyers is currently at a 41-year low, Lautz said.
Brighter days ahead for the US economy?
Better economic days might be ahead. The University of Michigan’s consumer sentiment index rose to 63.9% in June, compared to 59.2% in May, at the time the lowest level since November 2022.
Consumer sentiment, which is how Americans feel about their finances and the economy and what businesses use to gauge their brands’ impact, is also 28% above the historical low from a year ago and “its upward trajectory” might climb, said Joanne Hsu, director of University of Michigan’s Surveys of Consumers. Overall, “sentiment remains low. A majority of consumers still expect difficult times in the economy over the next year,” Hsu said.
While Zandi doesn’t expect a recession this year, Americans must still adjust to this new reality, he said. “We need to become more price sensitive and look for bargains and deals,” Zandi said. “That’s when businesses become more conscious as you and I become more judicious and circumspect in their price increases.”
When Stinney’s rent spiked, she moved instead of giving up essentials like her car and phone, both needed to grab extra shifts in an already exhaustive 70-hour work week.
“If my eyes are open, I’m usually working,” said Stinney, driving home from her airport job late Sunday. She prays staying with family, for now, will save her money. She plans to venture out solo again, maybe in six months to a year.
“I have to make it. Have to,” Stinney said. “I have no other choice.”
