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Everyone is impacted from higher gas, food and other commodity prices. How is each consumer responding to this pressure on their finances? A number just came out that will have longer term implications for many into the future.

Consumer debt exploded in March 2022 $52 billion, the largest increase in over a decade and follows a big increase of $42 billion in February. Revolving credit, or credit card debt, surged 21%. These numbers are usually associated with two options; a confident consumer who thinks his / her income will grow in the future, or a consumer who is trying to manage rising costs with limited income.

Many believe the economy is going from a confident consumer to a person that is trying to pay for rising costs in food, gas and other commodities. If more and more consumers are using credit just to cover expenses, there is a future cost associated to that. It only means that consumers has to earn more and more money to offset future expenses while paying for past expenses accrued with consumer debt.

It also means lower credit scores and higher charges when any future loan is taken out. Then, the consumer has to pay more to even stay on top of their finances. It is a vicious cycle. 

What You Can Do?

Could you reduce your expenses by 15%? See what you could do?

Every so often, you should  look at all of your expenses and determine if there are items that you are not using. Such things as a more expensive television package, a gym membership you don’t really use, or any other item that brings us no real benefit. Limit the extra drinks at the corner service station in the morning and any unnecessary trips, and extra food items.

It seems that the problems of inflation are not “transitory” as the Federal Reserve and President Biden stated last year. As a result, all consumers could be for an extended time of challenging economic conditions. That means everyone is going to have to find ways to manage and control these higher costs now.

Elected Officials Need to Have All Hands on Deck – NOW!

Americans cannot go down this road much further without feeling greater economic pain. Everyone hopes that this doesn’t get uglier, but some indicators are such that it is going in that direction for the foreseeable future. Inflation doesn’t just subside suddenly. It takes time and many argue that the economy has to go through a really tough period. Consumers don't need more free money, they need a stable prices and a good job.

The first step is a reduction in energy prices. President Joe Biden and Congress needs to find ways to reduce energy prices significantly. A reduction in the federal gas tax is just not real helpful since the savings is only 32 cents. When gas has increased over $2.00, more options need to be considered.

Green energy is a great idea – the economy is not ready to embrace it 100%. As a result, gas must be more readily available. Are more leases needed to drill, more pipelines needed to bring energy to market, and more federal regulations that can be lifted? 

When energy prices go down, the costs for many products and services can stop going up and even possibly decline. But, most every option needs to be considered. The President should not hold a press conference just to blame others for inflation and higher costs. Elected officials are elected to resolve problems, not blame others for their problems.  

Let Your Voice Be Heard

They need to hear from all Americans about the economic pains through emails and phone calls. Elected officials need to hear your voices, and they need to be held accountable if they are unable or unwilling to come up with policies that will better the financial situation for most Americans.  Either current elected officials need to work on policies that reduce the inflation rate, or all Americans need to look for others who will work on reducing inflation, and identify policies to bring a more prosperous economic condition. 

The inflation and consumer debt indicators are not good. The extra $52 billion in consumer debt last month is just a sign that many consumers are really struggling.

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