Wages in the US have risen this year at the fastest rate since 1983. Plus, some Americans are still sitting on a savings stash a year after the last stimulus check went out. But no one seems to care. That’s because this all comes at a time when inflation is lingering at its highest level since 1982. George Loewenstein, a professor of economics and psychology at Carnegie Mellon University, told Insider incomes were starting to rise as a result of the labor shortage and a lot of Americans felt they had the opportunity to improve their situations. “But one second later, it’s grabbed away from them,” he said, adding that this made inflation extra frustrating. “The things they would like to use their money for, like cars and houses, are all of a sudden scarce and expensive.”
In the fight of inflation versus wages, inflation is winning. It’s especially painful for lower-income Americans who can no longer bank on pandemic relief. About one-third of their earnings goes to essentials like food and energy, which have been some of inflation’s biggest victims. People are disgruntled about shelling out more for milk and bread. The rich aren’t happy either. Loewenstein likened inflation to a wealth tax for them as they watch the value of their savings shrink. The situation is exacerbated by the fact that interest rates haven’t risen with inflation, he said, though the Fed has hinted at raising interest rates as soon as March in an effort to cool down prices. But that still comes at a cost, in the form of much pricier credit cards and loans. Read More @ Business Insider.