Americans struggle to meet their basic spending needs and are therefore unable to save. (iStock)
Recent surveys show Americans are borrowing from savings or using other means to make ends meet under inflationary pressures.
More than a quarter (26.1%) of Americans need to withdraw money from their savings, including retirement accounts, or sell assets to meet basic spending needs, according to HelpAdvisor. investigation. Additionally, 11.5% have had to rely on family or friends to access funds for daily expenses.
The survey said inflation and rising prices are the reason Americans tap into savings or rely on other methods to cover basic spending needs. U.S. inflation is partially calming after hitting a 40-year high in 2022, but Americans are still dealing with rising gas prices, soaring food prices, and out-of-control housing costs. .
More than half of Americans (55% of respondents) said in a recent Gallup poll: investigation They are “a lot” worried about inflation, with a further 24% saying they are “a lot” worried. Additionally, 52% of Americans believe that inflation is the bigger problem facing America today than unemployment, immigration, or crime.
A HelpAdvisor survey reports that “post-COVID-19 inflation is taking a big toll on Americans’ wallets.”
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housing inflation
High home prices and mortgage rates continue to lock out many homebuyers. Mortgage interest rates remain flat Between 6.5% and 7%. The Fed said it is still developing a plan to reverse rate hikes, but the timeline for when rate cuts will begin remains unclear. Interest rate inversions are critical to creating more affordability for buyers who are also dealing with record increases in home prices.
However, according to recent Redfin data, housing supply is improving. report. The number of new listings nationwide increased by 13% year-on-year in the four weeks ending March 3, marking the first significant increase in about three years.
Housing prices also lost momentum. About 5.5% of home sellers lowered their asking prices, the highest percentage in February since at least 2015, while the share of affordable homes on the market increased, according to Redfin.
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Interest rates will remain high for a long time
In response to record inflation, the Fed aggressively raised the federal funds rate 11 times to about 5.4%, the highest level in 23 years. As a result of this policy, the inflation rate fell from a peak of 9.1% in June 2022 to 3.2% in February.
The Fed is widely expected to start lowering interest rates as inflation continues to slow, but the timeline for rate cuts has been pushed back further to give inflation more time to reach its 2% target rate. Fed officials expect at least three rate cuts in 2024. Fed Chairman Jerome Powell said the central bank will continue to monitor inflation and other economic indicators to decide when to cut interest rates. Powell explained that cutting too soon risks pushing inflation back, and cutting for too long poses a risk to economic growth.
“We believe our policy rates are likely at the peak of this tightening cycle, and if the economy continues broadly as expected, it would be appropriate to begin reducing policy restraint at some point this year,” Powell said. It’s very likely.” statement. “However, the economic outlook remains uncertain, and we remain very mindful of inflation risks. We remain prepared to maintain our current target range for the federal funds rate for an extended period of time, if appropriate.” Stated.
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