Finance
Americans tap into savings as they struggle with inflation: survey
Americans can’t save because they struggle to meet basic spending needs. (iStock)
Americans are borrowing from their savings or taking other measures to make ends meet under the pressure of inflation, a recent survey said.
More than a quarter (26.1%) of Americans have to withdraw money from savings – including retirement accounts – or sell off assets to meet basic spending needs, according to the Help Advisor survey. Moreover, 11.5% have had to tap family and friends to access capital for routine spending.
The survey said inflation and rising prices are reasons Americans tapped savings or resorted to other methods to cover basic spending needs. U.S. inflation is cooling some after hitting a 40-year high in 2022, but Americans are still dealing with rising gas costs, high food prices, and out-of-control housing costs.
More than half of Americans (55% of respondents) said in a recent Gallup survey they worried “a great deal” about inflation, with another 24% saying they worried “a fair amount.” In addition, 52% of Americans believe inflation is a bigger problem facing the US today than unemployment, immigration and crime.
“Post-COVID-19 inflation has taken a toll on Americans’ pocketbooks,” the HelpAdvisor survey said.
If you are struggling with high inflation, you could consider taking out a personal loan to pay down debt at a lower interest rate, reducing your monthly payments. Visit Credible to find your personalized interest rate without affecting your credit score.
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Housing inflation
High home prices and mortgage rates continue to crowd out many homebuyers as mortgage rates hover between 6.5% and 7%. While the Federal Reserve has said that the plan to reverse interest rate hikes is still in the works, the timeline for when those cuts will begin remains unclear. A reversal in interest rates is crucial in creating more affordability for buyers who are also dealing with record home price gains.
However, housing supply is improving, according to a recent Redfin report. New listings rose 13% from a year earlier nationwide during the four weeks ending March 3, the most significant increase in nearly three years.
Home prices have also lost some momentum. Roughly 5.5% of home sellers dropped their asking price, the highest share of any February since at least 2015, while the share of affordable homes on the market has increased, according to Redfin.
If you want to become a homeowner, you could still find the best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.
MILLENNIALS ARE DESPERATE TO BUY A HOME, MOST WILLING TO PAY A MORTGAGE RATE ABOVE 7%: SURVEY
Interest rates stay higher for longer
The Fed responded to record-high inflation by aggressively raising the federal funds rate 11 times to a 23-year high of about 5.4%. This policy helped bring inflation down to 3.2% in February from a peak of 9.1% in June 2022.
While it is largely expected that the Fed will begin to dial back interest rates as inflation continues to moderate, the timeline on cuts is being pushed further into the distance to give inflation more time to reach a 2% target rate. Fed officials anticipate at least three rate cuts for 2024. Federal Reserve Chair Jerome Powell said that the central bank will continue to monitor inflation and other economic indicators to determine when to lower rates. Lowering them too soon would bring the risk of bringing inflation back while holding back too long poses a risk to economic growth, Powell explained.
“We believe that our policy rate is likely at its peak for this tightening cycle and that, if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said in a statement. “The economic outlook is uncertain, however, and we remain highly attentive to inflation risks. We are prepared to maintain the current target range for the federal funds rate for longer, if appropriate.”
If you’re worried about the state of the economy, you could consider paying down high-interest debt with a personal loan at a lower interest rate. Visit Credible to speak with a personal loan expert and get your questions answered.
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Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
Treasury Secretary Scott Bessent joins ‘America’s Newsroom’ to discuss a possible 50% tariff on the European Union, a 25% tariff on Apple, possible Senate changes to Trump’s ‘big, beautiful bill’ and the push to modernize the IRS.
President Donald Trump’s “big, beautiful bill” cleared the House and is making its way through the Senate.
Still, critics point out the bill, which is over 1,000 pages, will add trillions to what is already ballooning government debt hovering at $36 trillion and deficits. However, U.S. Treasury Secretary Scott Bessent believes this can be managed.
“We think that we can both grow the economy and control the debt. What’s important, Bill, is that we grow the economy faster than the debt. What I would tell your viewers to focus on, what I am focused on, what Secretary Yellen was focused on is what is the total debt to GDP because we can grow our way out of this,” Bessent said during an appearance Friday on Fox’s “America’s Newsroom” with Bill Hemmer.
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Still, the bill contains several provisions that will benefit American workers and everyday households. FOX Business explains how your money may be affected.
NO TAX ON TIPS
Hardworking Americans won’t have to pay taxes on the tips they make. While this is good for service employees, it may mean lost revenue for the government…continue reading here
A tip jar on the counter at a coffee shop. (iStock / iStock)
401(k) FOR BABIES & CHILD TAX CREDITS
Typically, you start a 401(k) when you begin working, getting matched contributions from your employer. The bill may expand similar investment vehicles to newborns and other child tax credits…continue reading here.
Little girl sleeping (iStock / iStock)
SALT
High-tax blue states, such as New York, likely secured a win with a big bump for SALT, a deduction for state and local taxes, previously capped at $10,000…continue reading here
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The Midtown Manhattan skyline in New York City April 8, 2024. (Charly Triballeau/AFP via Getty Images / Getty Images)
AUTO LOANS INTEREST FREE
If you own or buy a car made in the U.S. using an auto loan, the interest is on track to be eligible for a deduction…continue reading here.
Vehicles for sale at an AutoNation Honda dealership in Fremont, Calif., June 24, 2024. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
MEDICAID SAFE?
Trump made it clear the Medicaid program, which provides basically free health insurance to Americans who meet income requirements, won’t be gutted. Not everyone is convinced…continue reading here
FOOD STAMPS
Changes to food stamps and nutrition assistance, formerly known as SNAP, or the Supplemental Nutrition Assistance Program, are part of the tax bill. Here’s what may change…continue reading here
A SNAP sign is displayed on a screen inside a Family Dollar store in Chicago March 3, 2020. (Daniel Acker/Bloomberg via Getty Images / Getty Images)
Finance
Goolsbee says Fed now has to wait longer before moving rates because of trade policy uncertainty
Chicago Federal Reserve President Austan Goolsbee said Friday that President Donald Trump’s latest tariff threats have complicated policy and likely put off changes to interest rates.
In a CNBC interview, the central bank official indicated that while he still sees the direction of rates being lower, the Fed likely will be on hold as it evaluates the ever-changing trade policy and how it impacts inflation and employment.
“Everything’s always on the table. But I feel like the bar for me is a little higher for action in any direction while we’re waiting to get some clarity,” Goolsbee said on “Squawk Box” when asked about Trump’s new actions Friday morning. “Over the longer run, if they’re putting in place tariffs that have a stagflationary impact … then that’s the central bank’s worst situation.”
“So I think we’ll have to see how big the impacts on prices are,” he added. “I know people hate inflation.”
Goolsbee spoke as Trump jolted markets again with a call for 50% tariffs on products from the European Union starting June 1 while indicating Apple will have to pay a 25% tariff on iPhones not made in the U.S. Apple mostly makes its coveted smartphones in China, though there is some production in India as well.
While the impact of a costlier iPhone likely wouldn’t mean much from a larger economic perspective, the saber-ratting underscores the volatility of trade policy and provides another flash point for a market already unnerved by worries about fiscal policy that have sent bond yields sharply higher.
Central bankers are generally careful not to wade into issues of fiscal and trade policy, but are left to analyze their repercussions.
Goolsbee said he is still optimistic that the longer-run trajectory is towards solid economic growth before Trump’s April 2 tariff announcement that rattled markets.
“I’m still underneath hopeful that we can get back to that environment, and 10 to 16 months from now, rates could be a fair bit below where they are today,” he said.
Goolsbee is a voting member this year on the rate-setting Federal Open Market Committee, which next meets June 17-18. At the meeting, officials will get a chance to update their economic and interest rate projections. The last update, in March, saw the committee indicating two rate cuts this year.
Markets expect the Fed will cut twice this year, with the next move not happening until September. Goolsbee did not commit to a course of action from here amid the uncertainty.
“I don’t like even mildly tying our hands at the next meeting, much less over six, eight, 10 meetings from now,” he said. “That said, as we went into April 2, I believe that we’re at pretty stable full employment, that inflation was on a path back to 2% and if we could do those I thought that over the next 12 to 18 months, rates could come down a fair amount.”
The Fed’s benchmark overnight borrowing rate is targeted between 4.25%-4.5%, where it has been since December. The actual rate most recently traded at 4.33%.
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