by Peter Reagan
Financially stressed Americans aren’t panicking – but they are pulling back. From postponed home repairs to rising utility bills, the squeeze on family budgets is quieter and more dangerous than ever. When prices rise but income doesn’t, what gives first?
We live in a world that changes quickly. New technology, new systems, and new ways of doing business have reshaped daily life in ways our grandparents could scarcely imagine.
But not all change feels like progress.
Some shifts don’t announce themselves with headlines or crises. They arrive quietly – through higher bills, delayed repairs, and a growing sense that the numbers no longer add up.
That quiet squeeze is exactly what many Americans are feeling right now.
Take, for example…
The expense that too many Americans can’t pay
Part of the American dream for generations has been to own their own home. It’s what our parents wanted, what our grandparents and great grandparents wanted, and many Americans have been able to fulfill that dream by owning (or at least paying on a mortgage for) their own home.
But home ownership comes with expenses, too.
There is maintenance and upkeep, and sometimes things need to be repaired or remodeled to remain in good working condition or even safe.
And many homeowners are having to put off necessary repairs. Rachel Barber with USA Today notes that this year 71% of homeowners “postponed renovations.”
Why?
“Economic uncertainty.”
In other words, they don’t have the money for it and aren’t confident that they will have the money for it in the foreseeable future.
Sure, in that situation, some people will file a claim on their homeowner’s insurance to get the repair done. But almost 25% of homeowners “admit” to not filing a claim because their house is in such disrepair that they don’t think that it will pass inspection.
For Gen Z homeowners, that figure rises to 33%.
That’s a huge number of homeowners.
And it’s not homeowners panicking over what they think could happen.
It’s homeowners (and, yes, renters, too) holding on to what money that they have because times are lean.
And people retreat, they get into defensive positions financially before headlines realize what is going on with the average (non-billionaire) American.
Home repairs are just one example of how this defensive positioning is affecting Americans’ spending choices. There are others.
What’s going on here?
Now, because the media hasn’t been reporting so much on this, at least not on their front pages or the breaking news sections of their broadcasts, you may be feeling like it’s only you that is struggling.
But you’re not alone. Millions of Americans are feeling the pinch.
After all, how can you have inflation hit as high as nine percent (in 2022) without the effects of that working its way into your wallet over time?
For example, Cynthia Cox at KFF (a health policy organization) says that healthcare premiums, on average, will rise 26% in 2026.
Doctor’s visits, prescriptions, and everything else medical will cost you more.
Another example: According to Wolf Richter, the Consumer Price Index for food has risen 30% in the last five years.
You’re not imagining it. It really is costing you more to feed your family.
Then, there’s J.D. Power’s article about the cost of home utilities. Did they change? If you handle the bill paying in your household, you know the answer. They went up 41% over the last five years.
It all hurts. It all takes more and more of your income and savings.
And paychecks haven’t been keeping pace with rising costs and inflation.
In fact, according to Gallup,
Americans’ already elevated perception that the cost of healthcare is the “most urgent health problem” facing the country rose further this year to 29%, up from 23% a year ago.
The percentage of Americans with that concern is the highest that it’s been in 21 years.
Will it get better?
It’s been a slow descent into being stretched thin, but that’s how inflation catches you. It slowly rises until you pause for a moment, shocked that you can no longer take your kids out for burgers for $10 or $15. Now, that same food costs you $20 or $25.
Unfortunately, though, paychecks aren’t likely to catch up to rising costs anytime soon, and that’s due to a variety of factors.
One factor is that, just to keep up with the breakneck pace of technological development, companies feel that they have to invest heavily into new technologies such as AI so that they can keep enough of an edge to survive in the long run.
How much are they spending on AI? A Fortune article says that, according to the Chief Technology Officer at Deloitte, companies are spending 93% of their AI budget on the technology itself and seven percent on the people who will be using the technology.
And it’s not just AI. That type of lopsided investment in which the people get the short end of the financial stick is happening in many areas where technology is developing rapidly.
So people aren’t bringing in paycheck increases to keep up with inflation.
And to add insult to injury, according to another Fortune article, due to declining birthrates and an aging population, most Western countries, including the U.S., are looking at a time, not too far into the future, in which there aren’t enough people to make the things and provide the services that we buy.
And you know what happens when demand stays the same (or increases) but the supply decreases?
Prices increase.
So, this demographic shift could cause wages to increase (eventually) for those workers who can do the jobs, but those increased labor rates will translate into increased prices for products and services.
Yet, more inflation.
It’s a difficult future that we’re looking at a slow slide into.
Fortunately, though, while you can’t singlehandedly change all the factors in our society and in our economy that are causing inflation to increase more and more, there is still time for you to take specific actions to shield yourself and your family from the inflationary fallout.
How?
By diversifying now into inflation-resistant stores of wealth that retain their purchasing power regardless of what happens with inflation or the economy.
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