The aggressive policies of the Federal Reserve in its attempt to curb inflation have wreaked havoc on the pockets and heads of US consumers. The fall in stock prices has already wiped out more than $9 billion in wealth from American households.
At his most recent meeting, Fed Chairman Jerome Powell warned that the central bank’s next moves to combat rising prices they can cause “some pain” in the future.
Given the constant movements in interest rates and the increasing uncertainty of an economic recession, 31% of Americans said they were not equipped for this scenario and it’s not doing anything to better prepare, according to a recent report from Bankrate.com.
Bankrate.com analyst Sarah Foster said that “recession fatigue or depression” are the blows Americans are taking to their financial security. First, with the coronavirus pandemic, followed by rampant inflation and the risk of a decline in economic activity.
She says staying motivated for more than two years to prepare for tough economic times can be “exhausting”.
Carnegie Mellon associate professor of marketing and consumer behavior expert Jeffrey Galak said the amount of stress that has been placed on people over the past two and a half years, with uncertain financial futures, political turmoil and rising inflation will lead, at some point, for them to stay, “without the will to continue making good decisions for their future”.
On September 21, the Fed raised the base rate to 0.75%, which rose in a range of 3%-3.125%, the highest since the beginning of 2008. The adjustment is preceded by two other increases of 0.75% in July and June, in addition to increases of 0.5% in May and 0.25% in March.
Monetary policies seek to bring inflation to a target of 2%. However, in at least six months it has not fallen below the 8% year-on-year range. In August it stood at 8.3% after reaching 8.5% in July, 9.1% in June, the highest figure in 40 years so far, – 8.6% in May, 8.3% in April and 8.5% in March, according to the Office of Labor Statistics.
The Fed’s rate hike can be reflected in higher costs to borrow for fixed-rate mortgages, to buy a car, or even to obtain a business loan.
Facing the risk of a recession experts recommend being prepared. To do this, they suggest optimizing expenses, avoiding compulsive purchases, finding additional income streams and seeking to have a fresh mindset in the face of change.
Ben Oakley is the guy you can really trust when it comes to Mainstream News. Whether it is something happening at the Wall Street of New York City or inside the White House in Washington, D.C., no one can cover mainstream news like Ben. Get a daily dose of Trustworthy News by Ben Oakley, only at Globe Live Media.