Sushi Money

So now we read that many consumers are spending their tax rebates to cope with the soaring cost of living?   No kidding!  It should be no surprise to anyone that inflation is taking an enormous chunk out of the typical family’s monthly budget.

In some areas we are cutting back and spending less money.  But the real problem for consumers is that we’re spending more money and getting less for it than ever before! 

I haven’t run the numbers, but I know we’re paying a lot more for basic needs this year, and it really has changed our driving and consumption behavior.  

Joseph LaVorgna, chief U.S. economist at Deutsche Bank, thinks at least half the rebate money may go toward energy costs alone.

“It’s not going to give you the bang for the buck as originally envisioned,” he said. “The odds of it having a longer-lasting impact on the economy are less. … People were not planning to use so much of it on energy and food.”

Diane Swonk, chief economist for Mesirow Financial in Chicago, also estimates that consumers will spend more than half of the rebates — but much of it on the higher cost of living, citing evidence of a “very stressed consumer.”

Although the government formally says inflation is under control, you don’t have to walk very far to find people who are paying for huge increases in food, transportation, and services.   We are seeing “fuel surcharge” on receipts and big ticket items more frequently.  And when we head to the airport next week to visit relatives for 10 days, we may have to pay for our checked baggage. 

There’s supposed to be multiple investigations taking place in the commodities markets.  It’s never that simple, but maybe the government will close a few loopholes and change the laws that allow rampant speculation in the energy markets.

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