Inflation remains a persistent economic challenge, putting pressure on consumers and causing financial strain. In this climate of economic uncertainty, Harvard University professor of economics Stefanie Stantcheva offers additional insight into the impact of inflation on consumers.
Stantcheva says that high inflation has left consumers feeling that their living standards are being lowered. Across income levels, individuals agree that “wages just don’t keep up with inflation,” creating a widespread sense of economic insecurity.
Stantcheva highlights the various ways inflation affects consumers. Their purchasing power is diminished, forcing them to buy fewer goods or settle for lower quality. As workers, they believe wage increases often fail to match the rising cost of living.
“We’re also just human beings with emotions, and what we see is that there is a real suffering from inflation,” Stantcheva tells Yahoo Finance.
Well, inflation has eased over the last year, but most Americans aren’t feeling that way.
And while the fed is working to coal prices even more, some people feel that they’re doing and what they’re doing is making inflation even worse here to break down how people are feeling and explain the trends that we’re seeing in inflation.
We’ve got Stephanie Sanche who is the Harvard University professor Economics.
Great to have you here with us.
Uh OK, let’s break down what consumers are feeling right now.
We’ve heard them to find a few different ways, whether that’s value conscious or whether that’s battle weary.
As we heard.
Uh Dana Peterson, the uh conference board, chief economist.
Yeah, what we see is that people really feel like inflation is lowering their living standard.
So, uh people have an over overwhelming feeling that wages just don’t keep up with inflation.
Um This is very widespread whether you’re lower income or higher income.
Um and people actually tend to attribute this a lot to employer discretion.
So if people don’t see wage rises they tend to say it’s because my employer doesn’t want to increase my wage.
Um, and so people who think that employers have actually a lot of discretion, uh, and choose not to increase wages.
Um, and another thing that’s really interesting is that although there have been many wage increases during this period, uh, it’s very rarely the case that people attribute them to inflationary adjustments.
Uh, most people who have received wage increases will say that it has happened because um of their job performance or career progression, especially for those who have switched jobs during that period.
Uh And so any wage increase is not really attributed to inflationary adjustment either.
And, and so to what extent do you expect that we’ll continue to see people try to job hop potentially to get those wage increases or to get those per uh per performance and promotions in order to offset inflation to the best of their ability.
Yeah, I think it’s, it’s, it’s probably going to continue happening because inflation affects us in many different roles.
We’re consumers.
Um And we’re affected in terms of our uh quantity and quality of things we can buy, we’re workers.
Um and we are affected by the wage increases that we get, we’re also asset or debt holders and inflation also impacts us in that role.
And then we’re also just human beings with emotions.
And what we see is that there’s a real suffering from inflation uh in terms of the very negative emotions that generates like fear and anger and stress uh that is quite widespread.
Um And hand in hand with that goes a big sense of inequity.
Um People feel like those with higher incomes are much better able to keep pace with inflation and just not be as hurt.
Uh So there’s a real sense in which inflation, you know, fosters inequality and, and, and it’s perceived to be quite unfair.