Why is inflation bad? This is why, everything gets more expensive and paychecks just don't make it anymore. In my opinion, the nation has been living off of mortgage extracted wealth for half a dozen years and now the credit crunch is coming home to roost as people find they are not making enough to get by without the credit cash flowing into their pockets.
And these circumstances wont change before election day, how do you think people are going to vote after another year of not being able to make ends meet? How about if things are even worse?
Living paycheck to paycheck gets harder
http://news.yahoo.com/s/ap/stretching_p
By ANNE D'INNOCENZIO, AP Business Writer 40 minutes ago
NEW YORK - The calculus of living paycheck to paycheck in America is getting harder.
What used to last four days might last half that long now. Pay the gas bill, but skip breakfast. Eat less for lunch so the kids can have a healthy dinner.
Across the nation, Americans are increasingly unable to stretch their dollars to the next payday as they juggle higher rent, food and energy bills. It's starting to affect middle-income working families as well as the poor, and has reached the point of affecting day-to-day calculations of merchants like Wal-Mart Stores Inc., 7-Eleven Inc. and Family Dollar Stores Inc.
Food pantries, which distribute foodstuffs to the needy, are reporting severe shortages and reduced government funding at the very time that they are seeing a surge of new people seeking their help.
While economists debate whether the country is headed for a recession, some say the financial stress is already the worst since the last downturn at the start of this decade.
From Family Dollar to Wal-Mart, merchants have adjusted their product mix and pricing accordingly. Sales data show a marked and more prolonged drop in spending in the days before shoppers get their paychecks, when they buy only the barest essentials before splurging around payday.
"It's pretty pronounced," said Kiley Rawlins, a spokeswoman at Family Dollar. "It seems like to us, customers are running out of food products, paper towels sooner in the month."
Wal-Mart, the world's largest retailer, said the imbalance in spending before and after payday in July was the biggest it has ever seen, though the drop-off wasn't as steep in August.
And 7-Eleven says its grocery sales have jumped 12-13 percent over the past year, compared with only slight increases for non-necessities like gloves and toys. Shoppers can't afford to load up at the supermarket and are going to the most convenient places to buy emergency food items like milk and eggs.
"It even costs more to get the basics like soap and laundry detergent," said Michelle Grassia, who lives with her husband and three teenage children in the Bedford-Stuyvesant section of Brooklyn, N.Y.
Her husband's check from his job at a grocery store used to last four days. "Now, it lasts only two," she said.
To make up the difference, Grassia buys one gallon of milk a week instead of three. She sometimes skips breakfast and lunch to make sure there's enough food for her children. She cooks with a hot plate because gas is too expensive. And she depends more than ever on the bags of free vegetables and powdered milk from a local food pantry.
Grassia's story is neither new nor unique. With the fastest-rising food and energy prices since the 1980s, low-income consumers are stretching their budgets by eating cheap foods like peanut butter and pasta.
Industry analysts and some economists fear the strain will get worse as people are hit with higher home heating bills this winter and mortgage rates go up.
It's bad enough already for 85-year-old Dominica Hoffman.
She gets $1,400 a month in pension and Social Security from her days in the garment industry. After paying $500 in rent on an apartment in Pennsauken, N.J., and shelling out money for food, gas and other expenses, she's broke by the end of the month. She's had to cut fruits and vegetables from her grocery order — and that's even with financial help from her children.
"Everything is up," she said.
Many consumers, particularly those making less than $30,000 a year, are cutting spending on nutritious food like milk and vegetables, and analysts fear they're further skimping on basic medical care and other critical services.
Coupon-clipping just isn't enough.
"The reality of hunger is right here," said the Rev. Melony Samuels, director of The BedStuy Campaign against Hunger, a church-affiliated food pantry in Brooklyn.
The pantry scrambled to feed 5,000 new families over the past 12 months, up almost 70 percent from 3,000 the year before.
"I am shocked to see such numbers," Samuels said, "and I am really concerned that this is just the beginning of what we are going to see."
In the past three months, Samuels has seen more clients in higher-paying jobs — the $35,000 range — line up for food as the fallout of the subprime mortgage woes takes hold.
The Regional Food Bank of Northeastern New York, which covers 23 counties in New York State, cited a 30 percent rise in visitors in the first nine months of this year, compared with 2006.
Maureen Schnellmann, senior director of food and nutrition programs at the American Red Cross Food Pantry in Boston, reported a 30 percent increase from January through August over last year.
Until a few months ago, Dellria Seales, a home care assistant, was just getting by living with her daughter, a hairdresser, and two grandchildren in a one-bedroom apartment for $750 a month. But a knee injury in January forced her to quit her job, leaving her at the mercy of Samuels' pantry because most of her daughter's $1,200 a month income goes to rent, energy and food costs.
"I need it. Without it, we wouldn't survive," Seales said as she picked up carrots and bananas.
John Vogel, a professor at Dartmouth College's Tuck School of Business, worries that the squeeze will lead to a less nutritious diet and inadequate medical or child care.
In the meantime, rising costs show no signs of abating.
Gas prices hit a record nationwide average of $3.23 per gallon in late May before receding a little, though prices are expected to soar again later this year. Food costs have increased 4.5 percent over the past 12 months, partly because of higher fuel costs. Egg prices were 44 percent higher, while milk was up 21.3 percent over the past 12 months to nearly $4 a gallon, according to the Bureau of Labor Statistics.
The average family of four is spending anywhere from $7 to $10 extra a week — $40 more a month — on groceries alone, compared to a year ago, according to retail consultant Burt Flickinger III.
And while overall wage growth is a solid 4.1 percent over the past 12 months, economists say the increases are mostly for the top earners.
Retailers started noticing the strain in late spring and early summer as they were monitoring the spending around the paycheck cycle.
Wal-Mart and Family Dollar key on the first week of the month, when government checks like Social Security and public assistance generally hit consumers' mailboxes.
7-Eleven, whose customers are more diverse, looks at paycheck cycles in specific markets dominated by a major employer, such as General Motors in Detroit, to discern trends in shopping.
To economize, shoppers are going for less expensive food.
"They're buying more peanut butter and pasta. And they're going for hamburger meat," Flickinger, the retail consultant, said. "They're trying to outsmart the store by looking for deep discounts at the end of the month."
He said the last time he saw this was 2000-2001, when the dot-com bubble burst and the economy went into a recession after massive layoffs.
For now, low-price retailers are readjusting their merchandising and pricing.
Wal-Mart is becoming more aggressive on discounting. It announced Thursday it is expanding price cuts to 15,000 items, ranging from Motts apple juice and Progresso soups to women's fleece tops, heading into the holidays.
Family Dollar, whose food offerings were limited to candy and snacks until two years ago, has expanded its mix of groceries like fruit cups, cereal and such refrigerated items as milk and ice cream while cutting back on shoes. This summer the chain began accepting food stamps.
Food pantries are also getting creative. Samuels said her church, Full Gospel Tabernacle of Faith, just started offering free cooking classes to teach clients who are diabetic or have other health conditions how to prepare vegetables like squash. It's also offering free exercise classes.
"We are trying to make them health conscious," Samuels said. "It's not right to give them just anything. Our mantra is eat well and live well."
___
Associated Press Writers Geoff Mulvihill in Mount Laurel, N.J., and Terry Tang in Phoenix, Ariz., contributed to this report.
I read this and wonder why MSM is not covering this very well. The economy is not up. GDP is not up. America is the most productive country in the world per worker output. We take less vacations and less pregnancy leave than the rest of the industrialized world. Often our workers are so productive, it is cheaper to hire American workers rather than Chinese workers to build anything, when the cost of the finished product is done, even with the wage disparity (do you think more jobs would not have fled faster if this were not the case, it is all about bottom line.)
CEO's salaries keep skyrocketing. Middle management is not raising as much and hourly worker salaries are stagnant, meaning they buy less when inflation and rising health care and energy costs are included into the equation. People are making money on EBay, just as Cheney said. They are making money flipping house. OOOPPPPSSSS! make that used to make money. What has happened is a giant shell game. The total economy is raising with inflation, but less and less people have access to the money. Meaning less goods are bought (how many Bentleys or Porsches do you need, unless you are Jay Leno?). Meaning less demand, meaning less need for manufacturing.
And with internet economies, or house flipping--how much new material is produced? You can't make up real, tangible products. Either you have a product, or you don't. No amount of paperwork shuffling can change that, it can just optimize profit on what is there. Has it occurred to anyone, that aside from being in the age of peak oil and beholden to those that own the oil, that we have little product. and to shore up our economy we just print more money and the notes that back the dollars we just printed are bought by foreign countries. Making it impossible for us to do anything but give them favored trade status, regardless of their ethics.
In order to ensure oil supplies and energy supplies, we invade a country. Period. Make no mistake. This is what Iraq is about. Leaders looked backwards to the past, to the Cold War, to British Imperialism for policy models. They worked so well, after all. See Vietnam and the British economy of the late 70s and 80s. What could have happened if we had put all that money we spent on the war into R&D for renewable energy and improved that technology. After all, it appears as though we will have plenty of wind and sunshine and wave energy with global warming on our door step.
America would have had a PRODUCT!!!! It would have ensured another twenty or thirty years of real employment (where manufacturing is not making fast food.) The world would have clamored for our technology and expertise. Instead we are a country of buffoons driving SUVs and pickups that are so big the have names like Balarafon and Blotsoutthesun. And of course many of these vehicles spout "Support Our Troops" stickers. Even if peak oil theory is incorrect, why indebt ourselves to foreign countries more by driving vehicles that get 14 mpg in town.
I hope the next administration has the cojones and common sense to put solar panels back on the White House.
rojo
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