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Inflation has been battering consumers for more than a year now. And since mid-2021, a lot of people have struggled to keep up with higher living costs.
In 2021, lawmakers approved a round of stimulus aid, so many people saw $1,400 checks hit their bank accounts just as living costs were starting to rise. And between July and December of 2021, parents entitled to the boosted Child Tax Credit were privy to monthly installment payments that no doubt made inflation easier to cope with.
But stimulus aid was by and large off the table in 2022. Granted, some states stepped up to issue rebate payments to give residents relief. But there was no federal stimulus aid to be had. As such, a lot of people had no choice but to raid their savings and rack up debt on their credit cards to keep up with higher costs last year.
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Meanwhile, as of December 2022, the annual rate of inflation was 6.5%, which is considerably higher than the norm. But in a recent CNN article, Federal Reserve Chairman Jerome Powell was quoted as saying he expects a “significant” decline in inflation to occur this year. And that could help many cash-strapped consumers finally get back on their feet.
An ongoing streak that needs to end
When inflation levels started creeping upward in 2021, a lot of people had, at that point, not even staged their own personal recoveries from the events of 2020. Many people lost their jobs or saw their income decline in 2020 on the heels of the Covid-19 outbreak. And those who depleted their savings that year in the absence of a job were no doubt at a supreme disadvantage once inflation started surging.
But the days of sky-high inflation may soon be coming to an end. The Federal Reserve’s ultimate goal is to see inflation dip back down around the 2% mark. And the central bank is likely to continue moving forward with interest rate hikes (albeit moderate ones) until that goal is achieved.
Powell doesn’t think we’ll get there this year. And seeing as how our most recent inflation reading was 6.5%, that logic tracks. But Powell thinks we could get to 2% inflation in 2024. And once that happens, consumers should have a much easier time covering their expenses.
How to cope with lingering inflation
Unfortunately, it could still be quite some time until living costs drop to more moderate levels. So your best bet until then is to do what you can to cut costs and boost your income.
With regard to the former, it could help to get on a budget so you can better track your spending. You can also audit your personal expenses monthly. If you’re spending more than expected on a non-essential expense, like streaming services or takeout, consider cutting back until living costs come down further.
With regard to boosting your income, January’s outstanding jobs report showed us that the U.S. economy is booming. It’s a good time to seek out a side job that puts extra cash in your pocket — and makes it easier to pay your bills.
Higher-than-average inflation could be with us for quite some time. But you can take steps to avoid a world of unfavorable consequences, like a pile of debt, in light of it.
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