Cost of living increases - Time for a raise?
It probably depends on how much you drive.
If you're feeling a little pinch on the green, it's not because of St. Patrick's Day. According to economists, the cost of living in the US rose sharply in February, mostly because of the spike in gas prices.
Try not to spend it all at once...
The observation proves that higher gas prices are putting a pinch on household finances leaving consumers with less money to spend on other things.
The situation is potentially dangerous. Unemployment still hovers around 8 percent and any dip in spending could threaten the fragile and slow economic recovery. However, the Federal Reserve insists the inflationary pressure is temporary and they do not believe inflation will rise out of control.
The consensus view is that the current spike in gas prices will be transitory and that consumers and the economy face little danger.
However, that is a ceteris paribus (all things being equal) assessment. Tensions with Iran and the possibility of war with the Islamic state or their acquisition of a nuclear weapon could change things. Also, unforeseen economic shocks could still affect the economy, pushed to the brink with high energy prices. The outcome of the presidential election can also influence the economy.
Unfortunately, paychecks are not keeping pace with inflation, costing consumers purchasing power. A report from the Labor Department shows that hourly earnings when adjusted for prices dropped 0.3 percent in February and a full 1.1 percent over the past year. And with high unemployment, workers are less likely to demand higher wages.
The Labor Department is also reporting that prices charged by producers rose by 0.4 percent. This increase is being attributed to the increase in gas prices, which are being passed along to consumers.
© 2012, Catholic Online. Distributed by NEWS CONSORTIUM.
- - -
Pope Benedict XVI's Prayer Intentions for January 2013
General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
Missionary Intention: Middle Eastern Christians. That the Christian communities of the Middle East, often discriminated against, may receive from the Holy Spirit the strength of fidelity and perseverance.
Keywords: CPI, Consumer Price Index, inflation, Federal Reserve, economy
Rate This Article
Leave a Comment
More Business & Economics News
- BAILOUT: Treasury, UAW health care trust will sell 50 million shares of GM stock at a $10 BILLION loss
- Great Recession took its toll: Americans missing their wealth
- Mom making more than dad in one in four U.S. homes
- Web developer: Earn $60,000 a year - without college degree or debt
- China, India, Brazil could dominate global investment by 2030
- Unemployment in U.S. comes roaring back - in a big way
- Criminally unfair? Why disgraced Enron CEO Skilling could see freedom sooner than you think
- Berkshire Hathaway Inc. hits first quarter record profit at 51 percent
- China and Japan now hold record amounts of Obama debt
- Fr. Paul Schenck: Finding Living Faith on Catechetical Sunday
- The Movie Yellow: Incest as 'Normal' and Cassavates's Slides Into the World of Woes
- The Chicago School Teachers Strike Reveals the Need For School Choice
- The Sexual Barbarians and the Dissolution of Culture
- The Happy Priest Challenges Us to Ask: Who is Jesus to Me?
- Michael Coren on Canadian Public Schools: Teachers, leave those kids alone
- We Cannot Ignore Our Consciences: Cardinal Dolan On Religious Liberty
- In the Face of Danger, Successor of Peter Travels to Lebanon as a Messenger of Peace
- Reflections on the Dignity and Vocation of Women: Who or What?
Disclaimer: The columns, articles, advertisers claims and any other features provided on Catholic Online Business & Economics are provided for personal finance and investment information and are not to be construed as investment advice. Under no circumstances does the information in this content represent a recommendation to buy, sell or hold any security. The views and opinions expressed in an article or column are the author's own and not necessarily those of Catholic Online and there is no implied endorsement by Catholic Online of any advice or trading strategy.